Is your security posture limited to the regulatory requirements? Do you know, have you asked?
By Simon Tweddle
Regulators cannot possibly stay ahead of cybercriminals and it’s simply not realistic to expect them to. Regulations can lag years behind criminal innovation, and like the picture I asked our AI to create for this post, we face an indestructible enemy. If you’re C-suite, start thinking about the regulatory requirements for security as the floor, and then ask yourself “how much do we need to invest to stand up?”
The Evolving Security Threat Landscape
The security threat landscape in the financial sector is both dynamic and complex, characterised by a wide array of cyber threats that evolve rapidly in sophistication and scale. These threats include, but are not limited to, ransomware attacks, phishing schemes, data breaches, distributed denial of service (DDoS) attacks, and advanced persistent threats (APTs). Cybercriminals continue to develop new techniques and exploit vulnerabilities in ICT systems, often with financial gain, espionage, or disruption as their primary motives.
The digital transformation taking place in financial services, while offering numerous benefits, has also expanded the attack surface for potential cyber threats. The increased reliance on cloud services, the proliferation of Internet of Things (IoT) devices, and the integration of artificial intelligence (AI) and machine learning (ML) technologies introduce new vulnerabilities and complexities in managing ICT risks. Moreover, the interconnectedness of financial institutions and their third-party service providers creates a scenario where a single point of failure can have cascading effects across the financial system.
Regulatory Compliance as a Minimum Standard
In response to this evolving threat landscape, regulatory frameworks like those established by the EBA and DORA aim to set a baseline for cybersecurity and operational resilience in the financial sector. These regulations are designed to ensure that financial institutions implement fundamental security measures, establish robust risk management processes, and are prepared to respond to and recover from ICT incidents.
However, treating regulatory compliance as the ultimate goal can lead to a tickbox mentality, where institutions focus on meeting specific regulatory requirements without addressing the broader spectrum of cyber threats they face. This approach can create a false sense of security, leaving institutions vulnerable to emerging threats that fall outside the scope of current regulations.
Regulatory standards represent the minimum level of security and resilience that financial institutions must achieve. They are based on known risks and best practices at the time of their drafting and may not account for the latest threat vectors or advancement in technology. Cyber threats evolve much faster than regulatory updates, meaning that institutions that do no more than meet regulatory requirements are always a step behind attackers.
Moving Beyond Compliance: A Proactive and Adaptive Approach
To effectively counter the evolving threat landscape, financial institutions need to adopt a proactive and adaptive approach to cybersecurity and operational resilience. This involves:
Continuous Risk Assessment: Regularly evaluating and updating risk assessments to reflect new threats, vulnerabilities, and changes in the business environment or technology landscape.
Advanced Threat Intelligence: Leveraging threat intelligence to gain insights into emerging cyber threats and trends, enabling institutions to pre-emptively strengthen their defences.
Investment in Advanced Technologies: Exploring and investing in advanced cybersecurity technologies, such as AI and ML for anomaly detection, to enhance threat detection and response capabilities.
Cybersecurity Culture: Fostering a culture of cybersecurity awareness and vigilance among all employees, recognising that human factors often represent the weakest link in the security chain.
Collaboration and Information Sharing: Participating in industry-wide and cross-sector collaboration initiatives to share threat intelligence, best practices, and lessons learned, enhancing collective resilience.
The security threat landscape facing the financial sector is characterised by rapidly evolving and increasingly sophisticated cyber threats. In this context, regulatory compliance, as defined by frameworks like the EBA guidelines and DORA, should be seen as the foundation upon which financial institutions build a more comprehensive and dynamic cybersecurity and operational resilience strategy. By adopting a proactive and adaptive approach that goes beyond mere compliance, institutions can not only safeguard themselves against current threats but also enhance their preparedness for future challenges in the digital age. This forward-thinking approach is essential for protecting the integrity, stability, and trustworthiness of the financial system in an increasingly interconnected and digital world.
Some additional thoughts…
Employee Training: Mitigating the Human Risk Factor
Human error remains one of the largest vulnerabilities in cybersecurity. Phishing attacks, in particular, are a significant threat, as they often target employees to gain access to a firm's network. Regular training programs can equip employees with the knowledge to identify and avoid such threats. These programs should cover the basics of cybersecurity, the importance of strong passwords, the recognition of phishing emails, and the safe handling of customer data. Visit Cyber Griffin for some free resources.
Advanced Cybersecurity Measures: Beyond the Basics
While foundational cybersecurity practices are essential, financial services firms must also employ advanced measures to stay ahead of cybercriminals. This includes the deployment of sophisticated cybersecurity technologies such as encryption, firewalls, intrusion detection systems (IDS), and intrusion prevention systems (IPS). Artificial intelligence (AI) and machine learning (ML) are also becoming increasingly important in detecting and responding to cyber threats in real-time.
Another critical aspect is the implementation of secure access controls, including multi-factor authentication (MFA), which adds an extra layer of security by requiring multiple forms of verification before granting access to sensitive information.
Physical Security: Ignore at your peril
All the training, advanced cybersecurity measures and threat intelligence you invest in will evaporate if a bad actor can enter your building and access your network. As consultants we are uniquely positioned to observe several firms cyber security and physical security protocols. We are getting contemporaneous intelligence. When firms take shortcuts to deliver functionality at the lowest cost they expose themselves to significant risk.
Cybersecurity Incident Response Planning: Do some
Despite the best preventative measures, cyber incidents can still occur. An effective incident response plan (IRP) is crucial for minimising damage and recovering from an attack. This plan should outline the steps to be taken in the event of a cyber breach, including the immediate containment of the breach, communication strategies, and the restoration of affected systems. Regular drills and simulations can help ensure that the response team is well-prepared to act swiftly and efficiently in the event of an actual breach. Visit Cyber Griffin for some free resources.
Proactive Cybersecurity Posture: Staying Ahead of Threats
Adopting a proactive cybersecurity posture means continuously monitoring the threat landscape and adapting cybersecurity strategies accordingly. This involves staying informed about the latest cyber threats and trends, conducting regular security audits, and updating security policies and practices as needed.
Collaboration and information sharing with other financial institutions and cybersecurity organisations can also play a vital role in enhancing cybersecurity. By sharing intelligence about threats and vulnerabilities, firms can benefit from a collective defence strategy, significantly enhancing their ability to protect against cyber-attacks.
And finally…
The financial services sector in the UK and EU (and beyond for that matter) faces significant cybersecurity challenges, but by adopting a comprehensive and proactive approach, firms can significantly reduce their the impact of cyber-attacks. Compliance with regulatory requirements provides a solid foundation, but it is the combination of employee training, advanced cybersecurity measures, effective incident response planning, and a proactive cybersecurity posture that will truly protect financial services firms from cyber threats.
As cybercriminals continue to evolve their tactics, so too must the cybersecurity strategies of financial institutions. The key to success lies in the continuous adaptation and improvement of cybersecurity practices, ensuring that firms remain resilient in the face of ever-changing cyber threats. By prioritising cybersecurity, financial services firms can not only protect themselves but also (as I’ve said before) maintain the trust of their clients, and the regulators that supervise them. Just because you cannot vanquish the enemy, doesn’t mean you shouldn’t continue to frustrate them.
