- Pressures and risks banks face today
- Offensive security best practices
- What’s next for financial services cybersecurity
Financial institutions are a major target for cyberattacks. After all, criminals gravitate to where the money is.
Due to the highly regulated nature of the financial industry, the demand for cybersecurity insurance has grown substantially over the past few years to help manage and reduce risk in the event of a security incident. As attacks increase in sophistication and impact, there are unique considerations and circumstances business and security leaders at banks must understand in order to attain secure coverage.
In this webinar, we sit down with Ethan Harrington, Founder and Principal at 221b Consulting and former H&R Block Director of Enterprise Risk Management and Security Insurance, and Mary Roop, a 15-year insurance and risk management veteran, to explore everything financial institutions should know about cybersecurity insurance. They’ll answer all your burning questions, including:
- What is commonly covered in cybersecurity insurance for financial institutions?
- What do I need to do / track to earn my certificate of insurance?
- How do you see the cyber insurance landscape changing over the next few years?
This is part two of our blog series that delves into cybersecurity for the financial services industry.
In part one, we discuss the current state of financial services cybersecurity, the challenges the industry faces, and opportunities for banks and other financial institutions to better protect their organizations.
In this part, we explore measurable and actionable metrics banks can track to craft a powerful cybersecurity story tailored to their regulators and leadership peers. We’ll also discuss opportunities to improve those metrics and address key challenges CISOs experience when building mature programs.
Let’s dive in.
Three Cybersecurity Metrics to Help Financial Institutions Tell Their Story to Regulators
The rise in cyberattacks against financial institutions means heightened scrutiny from bank regulators and more stringent compliance requirements. So, how can banks provide a thorough assessment of their security program to show regulators that they’re meeting regulatory requirements – and are keeping consumers and their data safe?
We can achieve that by identifying and keeping track of cybersecurity metrics that tell a powerful story.
These metrics are critical in two scenarios: to communicate your security program maturity and compliance to financial services industry regulators and to your leadership team/board to make the case for additional budget or resources.
When using metrics, keep in mind context over time is a key success factor for communication on trends. And consider the alignment with other metrics used to measure overall business success.
Cybersecurity metrics are historically challenging to determine as they don’t correlate directly to revenue or profit gain and are often proactive in nature. However, if you choose wisely they can help you benchmark your current cybersecurity program and show how your investments have impacted your organization over time.
To set a solid metric foundation, consider these three key cybersecurity metrics:
- Asset footprint: Anything that gives an accurate depiction of all your assets may be considered your asset footprint. This includes ephemeral assets (e.g., auto scaling compute or containers) and the number of endpoints per dollar of assets under control. For example, in endpoint management, you’re managing the number of devices, servers, or systems that are trying to access your company’s network. Taking inventory of all endpoints provides you with a better view of your security posture and how much it costs to manage your assets. The caveat is that this method works now, but not ideal for measuring your assets moving forward.
- Time to remediation: How long does it take to fix your critical vulnerabilities? What is the time it took to identify critical issues from discovery to vulnerability remediation? Being able to track this context over time provides an overall assessment of your risk profile. A scenario to consider: if your company doubles in size but the number of vulnerabilities remains the same or has increased, you need to investigate that.
- Percentage of revenue that makes up your cybersecurity budget: What percentage of the overall organizational revenue is being spent on cybersecurity? Is that spend increasing, but the number of vulnerabilities, security incidents, fraud reports, etc. remaining the same? Keeping track of your budget relative to your security outcomes can indicate the health of your program and areas that may require reevaluation.
For metric number three, you’ll need to partner with your CFO and finance team to track your progress over time. But for metrics one and two, it will be critical to formulate a plan to capture and improve these metrics to prepare for your next audit or budget meeting. Here are three ways to accomplish this:
- To measure and improve your asset footprint, leverage Attack Surface Management (ASM): ASM identifies and detects all known, unknown, and potentially vulnerable assets across your attack surface whenever there is exposure – not just what’s internet facing but in B2B network connections or peered cloud services too. ASM enables a comprehensive view of your environment from the outside in.
- To measure and improve time to remediation, leverage Penetration Testing as a Service (PTaaS): PTaaS combines technology with human expertise to find critical vulnerabilities that tools and traditional pentesting processes miss. The key here will be to work with a partner that can orchestrate and manage your vulnerabilities in a dynamic platform that allows you to track your remediation progress over time (see: NetSPI Resolve).
Check out these case studies to learn how two banks leveraged penetration testing to address the unique challenges financial firms face:
- NetSPI Addressing Financial Services Security Challenges Head-On
- NetSPI Testing Highlights Security Flaws for Leading Financial Services Firm
How to Articulate the Need for Budget
One of the challenges that we personally experienced in our roles as in-house security leaders and CISOs is the need to articulate budgetary needs to the leadership team and the board.
You need money and resources to employ the right people and acquire the necessary tools to protect your organization, right? This is correct, but you also need to recognize that the metrics you’re currently sharing may not align with the priorities of the CEO or the board. This gets even more challenging when the CEO or board hasn’t funded these initiatives historically.
So, what are ways you can effectively approach this?
First, understand that it’s not about confronting the board or the CEO. It’s about empowering them to articulate the risks they’re willing to take (e.g., risk of a possible breach, exposing consumer PII, etc.)
It’s important to engage with your leadership team and spend the time building this relationship so you both are aligned with the security or control posture of the organization. Security leadership should never operate in a silo.
Second, don’t tell half the story, tell the whole story. Explain how your budget decisions align with the company’s priorities: generating revenue, achieving company goals, maintaining a positive public reputation, etc. Articulate your metrics in the terms and language they understand to effectively tell you cybersecurity maturity story and make the case for additional support.
For more on this topic, read How To Eliminate Friction Between Business and Cyber Security.
Strategic Cybersecurity for Financial Institutions
More than ever, it’s important to be strategic when improving cybersecurity in the financial industry. Here are two things to consider to set you on the right path toward security program maturity:
- Tool overload and alert fatigue. Be mindful of purchasing capabilities you can’t manage or extract the value from. Why? Because you’re going to have to find the people to address all the data you aggregate. This lack of alert coverage and response could result in hesitancy from your leadership team or regulators.
- Technical leaders vs. security leaders. When you hire, ensure that your technical team also understands security and why it matters to your business. Someone with a technical background may not truly grasp security concepts and strategy. Ensure you have a balanced team that can help you articulate your metrics as outlined above.
If there is one thing we want you to take away from this blog post, it is this: financial cybersecurity is an ongoing effort – it is a not a point-in-time commitment. Continuous improvement is essential to telling your cybersecurity story – and the metrics you choose to measure and the way you communicate them will be the backbone of that story.
NetSPI CISO Norman Kromberg moderated a panel of CISOs and cybersecurity leaders at FutureCon Omaha. During the “Omaha CISO Panel” they discussed the cyberthreats that security leaders face today and the practices they are implementing to address the threats, among other topics.
Watch the recording below to learn the approaches First National Bank of Omaha Deputy CISO Sara Flores, Lindsay Corporation CIO Melissa Moreno, Metropolitan Community College CIO/CISO Chad Lynch, Hudl VP CISO Robert LaMagna-Reiter use to manage cybersecurity risk amidst the ever-changing threat landscape.
Want to continue the conversation? Connect with our team to learn how you can better defend against real-world cyber-attacks using our platform-driven, human-delivered approach to offensive cybersecurity.
The financial industry is a top target for cyberattacks. Just behind healthcare, the financial industry is the second most targeted sector, accounting for 12% of all breaches. But what makes banks such a high-profile target for cybercriminals?
The critical assets that financial institutions store – customer personal data and money – make them a lucrative target for cybercriminals. In recent years, we saw a steady inclination towards digitization in the financial industry, and the onset of COVID-19 only accelerated this momentum. Employees transitioning to remote work and customers relying on online transactions mean an ever-expanding attack surface.
Although cybercrime is attempted frequently, the financial industry is known to implement some of the most mature cybersecurity programs.
According to consulting firm McKinsey & Company, the banking sector is one of the most advanced in cybersecurity maturity, due to the regulatory environment, consumer expectations, and competitive pressures. These nuances alone create a unique threat landscape for banks across the globe.
In this two-part blog series, we will dive into cybersecurity for financial institutions. This first blog will explore the current state of financial services cybersecurity, the challenges the industry faces, and opportunities for banks and other financial institutions to better protect their organizations – and in turn, their customers.
In part two, we explore measurable and actionable metrics banks can track to craft a powerful cybersecurity story tailored to their unique threat landscape.
For additional reading on financial industry cybersecurity, check out these resources:
- Penetration Testing for Financial Institutions
- West Monroe Financial Institution Case Study
- How Secure are ATM Machines? An ATM Penetration Testing Expert Explains
- Leading Financial Institution Leveraged NetSPI Red Team Service to Improve
Their Security Posture - NetSPI Testing Highlights Security Flaws for Leading Financial Services Firm
The Current State of Financial Cybersecurity
Cybersecurity decisions are driven by security professionals, technology leaders, business executives, vendors/partners, board of directors, auditors, and regulators. The groups work in partnership to provide some of the most mature security programs.
Banks must comply with established regulators – often run by agencies such as the FDIC, OCC, NYDFS, and FRB in the US; the FCA in the UK; and OSFI in Canada – to oversee banking operations. Regulators ensure that banks comply with industry standards and consumer protection laws, and they oversee the soundness of the financial institution.
Banks that undergo a cybersecurity breach suffer from financial, reputational, and regulatory impacts. In addition to that, banks that receive a MRA (Matter Requiring Attention), or worse a MRIA (Matter Requiring Immediate Attention) from a previous examination or inspection will find themselves under intense scrutiny. This drives up operating costs and distracts resources away from other initiatives.
A medium-sized bank with smaller and less mature cyber functions is more likely to suffer a more impactful impairment. Larger banks that have had significant investments are not immune to compromise. But, because they’ve had the necessary investment to develop robust programs over the last two decades, they are less likely to experience a substantial impact.
This highlights that the current state of cybersecurity is situational and truly depends on various organizational factors and the accompanying unique cybersecurity considerations. For example, the size of your organization, type of banking services provided, who your examiners are, and location, among other factors.
Keeping that in mind, here are five things we know to be true today regarding today’s financial cybersecurity landscape:
- Large banks invest more resources and money into their cybersecurity programs to accommodate for the complex and costly processes needed to avoid risks.
- The larger your organization, the more complex your environment is to secure.
- Evolving regulatory frameworks account for the size and systemic risk a given institution has on the entire financial system.
- Banks with an international presence face the increased complexity of dealing with regulatory requirements globally.
- There is a significant investment in cybersecurity for financial institutions.
To understand these concepts in depth, let’s look at four key cybersecurity challenges the banking industry faces today.
Keeping up with Banking Cybersecurity Regulations
Different banks have different regulatory imperatives based on where they operate. For instance, in the US, the Financial Industry Regulatory Authority (FINRA) operates at the multinational level, the Office of the Comptroller of the Currency (OCC) at the national level, and the New York State Department of Financial Services (NYDFS) at the state level.
To keep up with the regulatory requirements domestically and internationally, security leaders must work closely with their risk and governance leadership to establish an effective compliance strategy to ensure security protects the enterprise while meeting the expectations of regulators. A strategy that maps regulatory requirements back to the business’ reporting processes is essential since banks work with different countries that implements their own compliance laws.
Furthermore, evolving privacy standards, such as General Data Protection Regulation (GDPR), have a tone of security built into their compliance requirements. It’s important to understand how your security practices can help you comply with privacy standards, although they do not explicitly evaluate cybersecurity.
At the national level in the US, there is a mix of consumer privacy laws to regulate what financial institutions can do with specific types of consumer data, but there is no single legislation that all privacy laws fall under. In fact, only California, Virginia, and Colorado have comprehensive consumer privacy laws. Many states enact their own privacy laws, but they are either incompatible or the data overlaps. For instance, a state may define a breach and what constitutes as personal data differently from another state.
Retaining Financial Industry Cybersecurity Talent
Across the spectrum, financial institutions struggle to attract and retain cybersecurity talent. Although this changes from organization to organization. For instance, larger banks have the funding to attract talent compared to smaller banks that experience more difficulty in this arena. And non-traditional financial institutions may have better luck attracting talent if they have flexible work-from-home policies. As other sectors like healthcare improve their cyber posture, competition for talent is increasing.
The COVID-19 pandemic has created significant demand for remote or hybrid roles. Unfortunately, many financial institutions are not opting to allow this given the traditional nature of the industry. This can deter security candidates from seeking roles in the industry especially since other industries offer competitive pay with the added benefit of being remote.
For smaller banks that lack cybersecurity experts with the necessary background, third-party service providers can help solve hiring challenges and serve as an extension of their team. NetSPI specifically leverages its penetration testing experts and technologies to perform offensive security testing and help financial institutions discover, prioritize, manage, and remediate their security vulnerabilities.
Providers that take a partnership approach can also help organizations meet their objectives and offer services with a bench strength that they are unable to attract or retain themselves.
Regulators Are Your Partners, Not Your Enemy
Regulations are put in place to protect financial institutions and their customers. In cybersecurity, you’re only able to safeguard your critical assets to an extent if you’re not keeping pace with the ever-changing threat landscape.
The independent nature of regulators is a resource many other industries don’t have. They’re able to provide unique perspectives based on the independence and years of experience an organization has. Having the ability to bridge the gap through the market and within the organization makes them an ideal partner to protect your organization and customers. Transparency and actively reaching out to your assigned auditors will be key in this process.
Start by engaging with them in conversations about the future of your organization. Engaging in conversations early in the pipeline and gauging their opinion will open opportunities for more discussion and insights that will help you with compliance.
You also want to work in tandem with your regulator to leverage regulatory requirements against existing controls and efforts to address control gaps in the organization. This enables the regulator to gain a better understanding of the company’s risk culture to effectively map the regulatory requirements back to the business’ operating systems. Then, the board and executive leadership team can make sound decisions relating to budget and risks.
Ultimately, your cybersecurity team and the regulator share the same goal – to protect your customer - so it is important to realize that your regulator is not your enemy, but your partner in maturing your organization.
Prioritizing Investments Within Financial Industry Cybersecurity
We predict that the banking community will continue to invest more in its cybersecurity programs compared to any other industry. Estimates forecast this industry will account for more than 30% of all security spending worldwide.
But how should financial organizations prioritize that spending? By focusing on risk.
What vulnerabilities, if exploited, would cause the most harm to your organization and customers? Fix those first.
What part of your business is responsible for most of your revenue? Increase your investments in securing this portion of your business.
Implementing new technologies or architectures (see: blockchain security)? Understand the cybersecurity implications before deployment.
Just because you are compliant, does not mean you are secure. That’s worth repeating: just because you are compliant, does not mean you are secure. Shifting to a risk-based mindset will set financial institutions up for future success and elevate your program maturity.
On January 31, NetSPI Scott Sutherland, VP of Research, and Norman Kromberg, CISO, were featured in the SecurityWeek article called Cyber Insights 2023: Cyberinsurance. Read the preview below or view it online.
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SecurityWeek Cyber Insights 2023 | Cyberinsurance – Cyberinsurance emerged into the mainstream in 2020. In 2021 it found its sums were wrong over ransomware and it had to increase premiums dramatically. In 2022, Russia invaded Ukraine with the potential for more serious and more costly global nation state cyberattacks – and Lloyds of London announced a stronger and more clear war exclusions clause.
Higher premiums and wider exclusions are the primary methods for insurance to balance its books – and it is already having to use both. The question for 2023 and beyond is whether the cyberinsurance industry can make a profit without destroying its market. But one thing is certain: a mainstream, funds rich business like insurance will not easily relinquish a market from which it can profit.
It has a third tool, which has not yet been fully unleashed: prerequisites for cover.
The Lloyd’s war exclusion clause and other difficulties
The Lloyd’s exclusion clause dates to the NotPetya incident of 2017. In some cases, insurers refused to pay out on related claims. Josephine Wolff, an associate professor of cybersecurity policy at Fletcher, Tufts, has written a history of cyberinsurance titled Cyberinsurance Policy: Rethinking Risk in an Age of Ransomware, Computer Fraud, Data Breaches, and Cyberattacks.
“Merck and Mondelez, sued their insurers for denying claims related to the attack on the grounds that it was excluded from coverage as a hostile or warlike action because it was perpetrated by a national government,” she explains. However, an initial ruling in late 2021, unsealed in January 2022, indicated that if insurers wanted to exclude state-sponsored attacks from their coverage they must write exclusions stating that explicitly, rather than relying on boilerplate war exclusions. Merck was granted summary judgment on its claim for $1.4 billion.
The Russia/Ukraine kinetic war has caused a massively increased expectation of nation state-inspired cyberattacks against Europe, the US, NATO, and other west-leaning nations. Lloyds rapidly responded with an expanded, but cyberinsurance-centric, war exclusion clause excluding state-sponsored cyberattacks that will kick in from March 2023.
Insurers’ response
2023 is a watershed moment for cyberinsurance. It will not abandon what promises to be a massive market – but clearly it cannot continue with its makeshift approach of simply increasing both premiums and exclusions to balance the books indefinitely.
Nevertheless, the expansion of ‘prerequisites’ would be a major – and probably inevitable – evolution in the development of cyberinsurance. Cyberinsurance began as a relatively simple gap-filler. The industry recognized that standard business insurance didn’t explicitly cover against cyber risks, and cyberinsurance evolved to fill that gap. In the beginning, there was no intention to impose cybersecurity conditions on the insured, beyond perhaps a few non-specific basics such as having MFA installed.
But now, comments Scott Sutherland, VP of research at NetSPI, “Insurance company security testing standards will evolve.” It’s been done before, and PCIDSS is the classic example. The payment card industry, explains Sutherland, “observed the personal/business risk associated with insufficient security controls and the key stakeholders combined forces to build policies, standards, and testing procedures that could help reduce that risk in a manageable way for their respective industries.”
He continued, “My guess and hope for 2023, is that the major cyber insurance companies start talking about developing a unified standard for qualifying for cyber insurance. Hopefully, that will bring more qualified security testers into that market which can help drive down the price of assessments and reduce the guesswork/risk being taken on by the cyber insurance companies. While there are undoubtedly more cyber insurance companies than card brands, I think it would work in the best interest of the major players to start serious discussions around the issue and potential solutions.”
There is no silver bullet for cybersecurity. Breaches will continue and will continue to rise in cost and severity – and the insurance industry will continue to balance its books through increasing premiums, exclusions, and insurance refusals. The best that can be hoped for from insurers increasing security requirements is that, as Norman Kromberg, CISO at NetSPI suggests, “Cyber Insurance will become a leading driver for investment in security and IT controls.”
You can read the full article at Security Week!
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