Cybersecurity is a key concern for senior political leaders, regulators and industry professionals and is one of the biggest security threats in the Middle East. Reports last year claimed several UAE banks were hit by a coordinated cyber attack, affecting e-banking operations and websites.
The global concern
In the US, the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) have made cybersecurity a top priority for the 2016 examinations of their members’ books and records covering:
The US Commodity Futures Trading Commission (CFTC) is also weighing in as indicated by the remarks made by their Chairman, Timothy Massad: “Cybersecurity is the most important single issue facing our markets today in terms of market integrity and financial stability.”
Trend Micro predicts that criminals will use tried and tested methods, such as exploiting existing vulnerabilities in software used by victims, to hit their targets in the year ahead. More countries are taking the initiative to educate their ‘net’ citizens and are creating policies and guidelines for firms and individuals to create awareness of such crimes. In Europe the EU is putting together a Cybersecurity Directive that is supposed to apply to all business sectors. Although some of the EU regulations recently passed or currently under consultation have some cybersecurity elements, nothing has been specifically aimed at the financial services industry.
Assessing the impact
Cybersecurity directly affects clients, data, networks, hardware, software and operations and protects them from theft, business disruption and destruction, which is why a proper risk framework covering identification, protection, detection, response and recovery is needed.
Firms should also be identifying their possible risks, assessing the likelihood of the event occurring and preparing their response(s). Armed with this information, they can then determine their risk tolerance and prioritise their cybersecurity counter-measures. Impact assessments should cover:
Industry best practice
The National Institute of Standards and Technology (NIST) has created a voluntary risk-based framework, comprising industry standards and best practices, for firms to use as a guide when setting up their own programme to manage their cybersecurity risks. The core framework, as mentioned above, should cover identification, protection, detection, response and recovery, which comprise the lifecycle of risk management of a cyber-breach.
One size doesn’t fit all
A tailored approach allows each firm to fit the framework to their own risk appetite and budget on both a tactical and strategic basis, and they should leverage from their existing security plans, e.g. business continuity and disaster recovery plans, physical site security, ‘clear desk’ policies, IT security, and update them to include controls and responses to cyber-risks.
A proactive approach
Demonstrating cybersecurity readiness to regulators can be achieved through risk assessments, implementing the right tools and working with the right strategic partner who can help a business perform a risk assessment and deliver clarity, not only to the regulators, but also to the key stakeholders of its key assets, concerning current status, and gaps in its controls and processes. A baseline assessment can also then be used to evolve a working plan to mitigate the gaps and demonstrate to the regulators and stakeholders that the firm is taking its cyber risk management responsibilities extremely seriously.
Hatstand’s cybersecurity services in the US, Asia, Europe and Middle East are geared towards helping our clients’ meet the demands of their key stakeholders, including the regulators, to ensure their institution has sufficient controls and processes in place to identify, protect, detect, respond and recover from a cyber breach. Hatstand provides the value added products and services to help its clients shore up their cyber defences and governance.
Its risk assessment model addresses a firm’s cyber risk management to incorporate industry best practice. Hatstand has a proven methodology of risk assessments in practice across multiple business processes. Its cybersecurity risk assessment provides a snapshot of a firms’ risk profile as well as maturity level. From this starting point firms can then identify where they need to spend time and effort in order to increase their controls and plan for the unexpected.
Brad O’Brien is CEO at Hatstand