Stop Throwing Money at Cybersecurity

cyber-operational-risk-150x1501 Most cyberattacks succeed because of weaknesses in people, processes, controls and operations. This is the definition of operational risk. Therefore, it makes sense to tackle cyber risk with the same tools you use to manage operational risk.

We continue to prove that the approach of the IT department managing cybersecurity is not working. Cyber risk is typically treated in parallel with other technology risks; the IT department is motivated to focus on securing the vulnerabilities of individual system components and proffers a micro view of security concerns.

My new Celent report on Treating Cyber Risk as an Operational Risk: Governance, Framework, Processes and Technologies”, discusses how financial institutions are advancing their cybersecurity practices by leveraging their existing operational risk frameworks to centralize, automate and streamline management, technologies, processes, and controls for a sounder and more resilient cybersecurity.

The report identifies and examines the steps required to achieve a risk-based approach to a sustainable and, ultimately, a measurable cyber risk management strategy:

1. Establish a long-term commitment to drive a top-down, risk-based approach to cybersecurity.

2. Recognize that the traditional approach of the IT department managing cybersecurity is limited and that most cyber risks are weaknesses in people, processes, controls, and operations.

3. If you have not already, consider deploying the NIST cybersecurity framework and tailor the framework to fit your individual cybersecurity requirements. The framework lets you take advantage of your current cybersecurity and operational risk language, processes and programs, industry standards and industry best practices. Both cyber and operational risk should be informed by and aligned with the institution’s enterprise-wide risk management framework.

4. Move your organization along the cybersecurity maturity curve by building dynamic risk models, based on shared industry data and assumptions, to measure and monitor cyber threats and pre-empt those attacks.

5. Stop throwing money at the problem. Educate decision-makers on why and how breaches happen. Do not purchase in siloes or under pressure, select the right expertise to identify the issues and carry out due diligence on products.

6. Use the NIST’s five functions to navigate and manage cybersecurity technology requirements and purchases.

7. Know what technology you want from your vendors; know what advice to seek from your consultants.

8. Acknowledge that cybersecurity is the responsibility of every employee and human behavior is the most basic line of defense. Institutions cannot hesitate in the goal to educate their employees, third parties and customers.

Proposed new cyber security regulations will be a huge undertaking for financial institutions

New York State Department of Financial Services (NYDSF) is one step closer to releasing cyber security regulations aided by the largest security hacking breach in history, against JP Morgan Chase. The attack on JPMorgan Chase is revealed to have generated hundreds of millions of dollars of illegal profit and compromised 83 million customer accounts. Yesterday (Tuesday, November 10), the authorities charged three men with what they call “pump and dump” manipulation of publicly traded stock, mining of nonpublic corporate information, money laundering, wire fraud, identity theft and securities fraud. The attack began in 2007 and crossed 17 different countries. On the same day as the arrests, the NYDSF sent a letter to other states and federal regulators proposing requirements around the prevention of cyber-attacks. The timing will undoubtedly put pressure on regulators to push through strong regulation. Under the proposed rules, banks will have to hire a Chief Information Security Officer with accountability for cyber security policies and controls. Mandated training of security will be required. Tuesday’s letter also proposed a requirement for annual audits of cyber defenses. Financial institutions will be required to show material improvement in the following areas:
  1. Information security
  2. Data governance and classification
  3. Access controls and identity management
  4. Business continuity and disaster recovery planning and resources
  5. Capacity and performance planning
  6. Systems operations and availability concerns
  7. Systems and network security
  8. Systems and application development and quality assurance
  9. Physical security and environmental controls
  10. Customer data privacy
  11. Vendor and third-party service provider management
  12. Incident response, including by setting clearly defined roles and decision making authority
This will be a huge undertaking for financial institutions. Costs have yet to be evaluated but will be in the millions of dollars. It will be very difficult to police third party security because, under the proposal, vendors will be required to provide warranties to the institution that security is in pace. The requirements are in the review stage and financial institutions should join in the debate by responding to the NYDFS letter.