To have an effective regulatory compliance strategy, institutions need to use internal audits and risk assessments. Part of which is cybersecurity and vendor management , the focus of this blog. The most effective internal audit teams want to go beyond the conventional roles of monitoring controls, risk, and governance in their businesses.
Unfortunately, many financial institutions (FI’s) don’t realize the importance of these cybersecurity and vendor management and how they can work together to create a comprehensive plan.
This blog will discuss the benefits of using risk assessments and internal audits and how they can help your business stay compliant.
Protect the institution from potential breaches
By monitoring vendors’ systems for signs of intrusion or malware, financial institutions can help to ensure that their systems are not compromised in the event of a vendor breach.
Evaluate vendors’ ability to identify and resolve incidents
Cyber monitoring ( i.e cybersecurity and vendor management) provides insight that can help an institution learn about its vendors’ cyber risk by helping answer questions such as:
- Is the institution identifying issues before the vendor?
- Are the issues identified severe or minor vulnerabilities?
- Are identified issues handled promptly?
- Does the institution feel comfortable continuing to use the vendor?
- Are there gaps between the vendors’ self-reported reports and third-party reports?
Safeguard customer data
Customer data is one of the most valuable assets that financial institutions have. If a vendor’s systems are breached, and customer data is exposed, it could have a devastating effect on the bank’s reputation.
Identify low and medium-risk vendors to ensure proper resources are allocated to high-risk and critical vendors
Regulators require that financial institutions identify high-risk and critical vendors used in their operations. Cyber monitoring data helps refine assessments by providing real-life demonstrations of vulnerabilities within a vendor’s cyber controls.
Impacted data can be utilized by comparing it to existing risk assessment data to delve into vulnerabilities requiring more significant review. For example, some vendors have a lower risk because they follow best practices when identifying issues. Conversely, vendors with existing vulnerabilities or a reputation of issues require more detailed evaluation than critical vendors.
Maintain compliance with regulations
Financial institutions are subject to several regulations, such as the Gramm-Leach-Bliley Act (GLBA), that require them to take steps to protect customer data. If a vendor’s systems are not secure, it could put the financial institution at risk of violating these regulations.
Help to identify and focus on issues requiring remediation to mitigate risk
As technology further develops, new threats constantly emerge as well. Cyber monitoring can help to identify these threats and vulnerabilities so that they can be addressed quickly.
Cyber-attacks can be costly. However, by monitoring vendors’ systems and catching potential threats before they cause damage, financial institutions can save themselves a lot of money in the long run.
Document findings to improve continued monitoring of vendor relationships
Cyber monitoring illuminates if vendors are taking security seriously with:
- System protection. Physical and system controls and access should be logged and monitored. Make sure customer data is secured. Monitoring these details provides data to ensure system wide security.
- Internal controls. Vendors should be implementing controls that prevent risk and damage from cyber security attacks. Audits are used to test the controls while monitoring ensures they exist.
- Data security. Data transmission, storage, and destruction should be done following protocols and using multi-factor authentication.
- Cloud risk. Additional review is required for vendors that rely on cloud-based systems.
Including cyber monitoring in the financial institution’s vendor management program is critical to protecting the institution from potential breaches, safeguarding customer data, and maintaining compliance with regulations.
As cyber security regulations continue to expand and as the problem of cyber-attacks and breaches increases, vendor cyber monitoring is an essential investment for financial institutions to ensure third-party vendors are doing their due diligence to protect the institution’s systems and data.
It’s also an effective way to save money in the long run. If a financial institution isn’t already doing so, we recommend that institutions start monitoring their vendors’ systems for signs of intrusion or malware. Doing so could help to protect the institution from a costly and damaging cyber-attack.
If the institution doesn’t know where to start with improving its cyber monitoring within its vendor management program, contact RADD LLC. With our team of experienced and professional consultants, we can help your institution get on the right track to protecting its data and systems.