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July 6, 2017

Vendor Cybersecurity in 2017

39 - Preparing for Cybersecurity in 2017 - FINAL

Watch this video to learn about the timeline of cybersecurity becoming a focus for examiners, issues at play and different ways your financial institution can comply.


Video Transcript

Welcome to this week’s Third Party Thursday! My name is Aaron Kirkpatrick and I’m the Information Security Officer here at Venminder. In this video, we’re going to cover:

  1. Timeline of cybersecurity becoming a focus for examiners
  2. The issues at play
  3. Different ways your financial institution can comply


Timeline: How Cybersecurity Has Become a Focus for Examiners

  • June 2013: The Federal Financial Institutions Examination Council, or FFIEC, established Cybersecurity & Critical Infrastructure Workgroup.
  • May 2014: The FFIEC announced plans for cybersecurity assessments to be included in the IT examination process.
  • June 2014: Examiners ran a pilot program for cybersecurity examinations at 500 community banks and credit unions to determine if boards and executives were prepared for cyber resilience.
  • June 2015: The FFIEC released its Cybersecurity Assessment Tool. This is currently a voluntary tool for self-assessment and sometimes used as part of the IT examination process. This is discussed in detail in our Third Party Thursday video FFIEC Cybersecurity Assessment Tool.
  • November 2015: The FFIEC updated its Information Technology Examination Handbook with a focus on IT governance for boards of directors, risk management for operational risks and IT risk management.
  • April 2016: The FFIEC added an appendix to its Information Technology Examination Handbook, Mobile Financial Services, focusing on the risks posed by mobile applications, mobile websites, wireless payment and SMS.
  • December 2016: New York became the first state to create a cybersecurity regulation to protect consumer data and financial systems. This impacts financial institutions operating in New York. After a couple of rounds of revisions and strong opposition from parts of the industry, the regulation became effective March 1, 2017.

Cybersecurity will be a focus for examiners in 2017. Now is the time to prepare if you haven’t begun already.

The Issues at Play

  • Satisfying Regulators: How will you comply with the focus on cybersecurity of your vendors?
    • Casually ask your vendors?
    • Check in once a year to request updated documents?
    • Assume/trust they have it covered?
  • Protecting Your Future: When (not if) a breach or other business impacting event happens at or is caused by one of your vendors, how much will it cost your institution...
    • In dollars?
    • In reputation?
    • In lawsuits?
    • In lost customers?
    • In internal effort?

How to Prepare

  • Understand the Inherent Risk: Financial institutions need a solid methodology to identify inherent risk from cyber threats. Start by defining the following:
    • Connection types and the flow of information
    • Products and services offered
    • Technologies implemented

  • Prepare Your Controls: Once a solid understanding of inherent risks has been identified and documented, financial institutions need to focus on risk mitigating controls. The FFIEC highlights the following areas:
    • Risk Management and Oversight: involves governance, allocation of resources as well as training and awareness of employees.
    • Threat Intelligence and Collaboration: the acquisition and analysis of information to identify, track and predict cyber capabilities, intentions and activities that offer courses of action to enhance decision making.
    • Cybersecurity Controls: controls can be preventive, detective or corrective.
    • External Dependency Management: includes the connectivity to third party service providers, business partners, customers or others and the financial institutions’ expectations and practices to oversee these relationships.
    • Cyber Incident Management and Resilience: involves incident detection, response, mitigation, escalation, reporting and resilience.

Different Ways Your Financial Institution Can Comply

  1. Outsource: There are new tools on the market that offer affordable, continuous and highly informative monitoring of your vendor’s actual versus documented security posture. One such tool is SecurityScorecard, a Venminder partner.
  2. In-House: You may have someone on staff that understands how to assess and monitor your vendors for cybersecurity preparedness. Suggested qualifications for this function would be staff with a CISSP certification or an equivalent number of years in IT/Information Security experience.
    Ensure the staff member has the time and tools available to monitor on a continuous basis since cybersecurity is a continuous threat. Remember that snapshot or point in time reviews create gaps and increase your risk.

In this video we’ve covered a short history of how we got to where we are today, impacts to financial institutions and a few things you can do about it. Again, I’m Aaron Kirkpatrick and thank you for watching! If you haven’t already, subscribe to the Third Party Thursday series.


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