The rapid development of technology and digitization in the financial industry is constantly driving new regulations around the world, and there is already a lot happening in 2020. A flood of data privacy regulations in North America seems likely after the California Consumer Privacy Act, but that is just one example. In every region, new regulations for the security of financial services are going into effect.
As per 2019 Data Breach Investigations Report presented by Verizon, the financial yield was the most common motive in data breaches across all types of industries, with 71% of breaches financially motivated. And in the financial and insurance sector these numbers jumped to 88%.
Moreover, most of the mid-market companies with 250-499 employees, surveyed by Cisco experienced a breach, which indicates that smaller businesses are an increasingly attractive target. The survey also found that 1/5th of those victimized said the breach cost them more than $1 million.
To avoid becoming another breach statistic, financial institutions should always follow these top security guidelines,
Assess online transactions and the level of risk that is present by type of transaction or user group, so as to develop risk mitigation strategies. Make sure to assess specific attributes like customer type, volume and capability of your transaction methods, information sensitivity and existing security, the convenience of use and the customer experience, and how smartphones are interacting with your environment.
Don’t only consider financial loss but also a liability, corporate risk and reputational damage. And don’t simply do this once, review and refresh this assessment at least once in a year. The risk assessment will empower you to map out potential impacts and the security service levels required.
There are presently several core security frameworks to help financial organizations manage cyber risk more effectively. These include:
The National Institute of Standards and Technology (NIST) Cybersecurity Framework: This framework covers best practices in five core regions of data security, Identify, Protect, Detect, Respond, and Recover.
The Federal Financial Institutions Examination Council (FFIEC) Information Technology Examination Handbook: This manual gives a comprehensive list of security guidelines that cover everything from application protection and end-of-life management to vendor management and the rule of least privilege.
Utilize the NIST and FFIEC guidelines to start establishing baseline security capabilities that make the compliance processes for GLBA, PCI DSS, and SOX standards easier.
Particularly in finance, 24×7 threat monitoring is critical, as the real damage is often done when you’re caught unaware.
The majority of data breaches are subtle in nature. After hackers worm their way onto your network, they will attempt to cover their tracks so as to be persistent. They infiltrate, perhaps by first stealing login credentials through a phishing campaign, and then they attempt to cover their activity using a series of advanced tactics.
Once they’re inside, the risk increases exponentially as they attempt to move along the side to different systems with sensitive information. This has potentially catastrophic consequences for companies in financial services, as the next step is to make backdoors through which they can slowly siphon data for use in future attack campaigns or to sell on the dark web.
At times, hackers will take more direct action. In one of the boldest attacks against a financial institution to date, hackers used the SWIFT banking network in the year 2016 to wire themselves $81 million after breaching the Bangladesh Central Bank utilizing a series of phishing scams.
This incident, and others like it, highlights the importance of real-time threat monitoring. The sooner you detect an indicator of compromise, the more rapidly you can take action to prevent harm to your financial institution. Also, early detection can be the difference between a minor setback and a major nosedive.
Insurance for Financial Institutions
Even with cutting-edge security, there is always a chance of insurance risk. Numerous types of business insurance can secure a financial institution. These might include:
- Commercial property insurance: If someone breaks into your organization looking for money, they might leave damages. Property insurance can help you in recovering the losses from the damage. It might also pay for you to institute security reforms to prevent further such incidents.
- Errors and omissions coverage: Your employees, no matter how professional, could possibly make mistakes that lead to financial problems for clients. If your institution’s financial advice damages assets of a customer, this insurance could help you compensate customers for these damages.
- Cyber liability insurance: There is always a chance that a cyber-attack could compromise the financial privacy of the customers. Cyber liability insurance can help you with numerous aspects of damage control. This might include actions such as credit monitoring and customer notifications.
- Umbrella insurance: Your business likely carries a strong general business insurance policy. However, situations might emerge that exceed the coverage limits of this policy. Umbrella insurance could help you cover extra losses not covered by the standard insurance policy. It could also assist you to get more coverage for already-defined policies.
Taking the appropriate care of your financial institution means having the correct insurance coverage, work with your insurance agent to get the perfect amount and type of coverage.
Customer Awareness and education
In the end, we would also advise you to involve the customer as much as possible to help fight fraud. Ongoing education and training programs should be in place to make sure that everyone does their best to help protect and mitigate present threats.
There are some banks that are deploying security measures that inform clients when some suspicious transactions are in progress and ask them to confirm whether the given transaction is valid.
It is vital that customer confidence is maintained. No financial institution can afford the reputational damage that an online attack can cause. Continuous investment in security systems, processes and people is a must, instead of a nice-to-have. Otherwise, banks risk leaving client data vulnerable to attack.
Security has always been a concern for financial institutions and taking some extra measures to ensure that is always better. Ultimately our goal is to help you in transforming your perception of security beyond a threat and into an opportunity to construct customer satisfaction, attract new customers, and further differentiate your business. Good security system pays off in the form of customer trust and partners.
Chandrima is a Content management executive with a flair for creating high quality content irrespective of genre. She believes in crafting stories irrespective of genre and bringing them to a creative form. Prior to working for Hrtech Cube she was a Business Analyst with Capgemini.