Suppose you run a business in the financial services industry. In that case, you don’t need anyone else to tell you that you’ve got a lot on your plate regarding cybersecurity and compliance with changing regulations. You handle extremely sensitive customer data day in and day out. Without proper security protections in place, you risk damaging your reputation, getting hit with lawsuits or fines, or even losing the trust of your customers altogether.
While the rising threats are enough to keep anyone up at night, staying up to date and informed with the spider’s web of compliance and legislation is a full job task in itself. But turning a blind eye could come back to bite you.
In this guide, we will review the various compliance requirements that finance firms must meet, particularly regarding different types of cybersecurity threats and solutions.
A Breakdown of the Key Financial Cybersecurity Regulations
The major laws and standards you need to know can be boiled down to a few key regulations:
Gramm-Leach-Bliley Act (GLBA)
First, the GLBA and its “Safeguards Rule” protect nonpublic consumer data. They require written information security plans, regular assessments of cyber risks, and training to protect customer information.
There’s also a “Financial Privacy Rule” mandating that you disclose and control any sharing of personal data. If you don’t comply with these legislative requirements and maintain GLBA compliance, you can expect some hard-hitting fines and public backlash, which won’t exactly be the best news for building customer trust.
Sarbanes-Oxley Act (SOX)
While this legislation mainly focuses on corporate governance and financial reporting, SOX has multiple sections that indirectly emphasize cybersecurity measures.
It states proper internal controls over financial accuracy must include IT safeguards. With cyber incidents able to undermine reporting integrity, lacking security controls violates SOX and elicits substantial penalties.
Payment Card Industry Data Security Standard (PCI DSS)
Applied across the payment card industry, the PCI DSS outlines 12 core security requirements, such as implementing firewalls, access controls, encryption, and vulnerability management programs. Any organization that handles cardholder data and uses payment gateway services must comply to avoid fines or losing card processing abilities altogether if a breach occurs.
Other Relevant Regulations
- State data breach notification laws like the California Consumer Privacy Act (CCPA) increasingly impose cyber standards on your financial operations.
- Public companies must follow SEC guidance on promptly disclosing material cybersecurity risks.
- New York’s strict 23 NYCRR 500 regulations apply to financial groups operating in the state.
- Although voluntary, the NIST Cybersecurity Framework is an industry gold standard that can help to boost your security posture.
The regulatory landscape remains complex, but adhering to this combination of key standards lays the groundwork for compliance and resilience.
Practical Steps For Staying Compliant
Given the varying regulations above (and the added pressure from customers to keep their data safe), cyber compliance demands can seem intimidating. But the good news is that with the right approach, maintaining compliance and securing your financial data doesn’t have to be painful or break the bank.
Perform Thorough Assessments
The first step is identifying potential gaps and vulnerabilities across your people, processes, and tech infrastructure. An experienced consultancy can cost-effectively conduct in-depth assessments benchmarked to exactly what regulations and industry best practices expect. This analysis should provide a cyber risk profile and a roadmap of priority risks.
Build and Update Plans
Every significant regulation requires documented information security or cyber resilience plans regularly updated as threats shift. Gather leadership support in collaborating cross-functionally, then systematically map out plans codifying your security controls, incident response protocols, disaster recovery scenarios, training programs, vendor risk management, data classification schema, compliance self-auditing procedures, and more.
Specifically, your plan should cover response strategies for potential data breach scenarios, including containment measures, improving defenses, external and internal communication plans, notification procedures, and reviewing insurance policies if a worst-case incident occurs. Plans should be reviewed at least annually to capture lessons from exercises or incidents and align with evolving risks unearthed in updated risk assessments.
Tighten Up Your Technology Safeguards
Regulatory fine print emphasizes the need for adequately configured systems with patched vulnerabilities across endpoints, networks, firewalls, servers, and more. Consider emerging technologies like micro-segmentation, enhanced malware detection gateways tailored to financial sector threats, or security-focused cloud migration for at-risk workloads. Promoting more harmony between IT and security teams in understanding weaknesses and reallocating resources proactively can significantly boost resilience.
Double Down on Risk Management
When regulators emphasize managing risks, they really mean that you need to stay on top of threats to your organization and how well your defenses stack up. Yet, keeping tabs on your ever-changing risk landscape seems like a never-ending job (and it is). But here’s a simple way to stay on track:
- Make a spreadsheet mapping out specific risks, like phishing attacks on your people or data-encrypting malware.
- Next to each risk, list controls you’ve implemented to reduce them – like security awareness training or endpoints with antivirus.
- Note any test findings showing controls with gaps or audit failures.
- Estimate residual risk to guide decision-making and budget.
Essentially, you’ve created an evolving cheat sheet on risks versus your controls that shows what needs more security expenditure (or attention). Keep it updated as part of operations; it will surely come in handy later.
Train Your Team
It can be tempting to invest in innovative new security tools and ignore the human element. While new cybersecurity solutions will certainly boost your security, your employees are still the biggest “risk vector.”
People let their guard down against phishing, overshare sensitive data, or simply don’t follow good security hygiene out of ignorance. And cybercriminals are exploiting human fallibility more ruthlessly than ever.
That’s why ongoing, engaging awareness training is so crucial. But it can’t just be dry presentations once a year that put everyone to sleep. Get leadership backing to build a genuine culture focused on security. Highlight real examples of social engineering tricks and the latest data theft scams and tactics you might’ve heard about on finance news.
Make sure people feel comfortable raising concerns without judgment. Equip staff across every function with the knowledge and support to be proactive defense. An organized program focused on empowering employees and limiting honest mistakes will likely pay for itself many times over.
Final Word
We must remember that the financial sector serves as a fundamental pillar upholding society, trade, innovation, and opportunity. Core to these functions is public trust—without actual security measures in place protecting sensitive consumer data and systems from growing cyber threats, everything risks collapsing.
That’s precisely why financial services face rigorous regulations demanding stringent cybersecurity controls. Regulators recognize that non-compliance or half-measures could have far-reaching, disastrous consequences if exploits unleash systemic crises. They’re raising the bar not to punish legitimate businesses but to safeguard stability and confidence.
The uplifting news is it IS possible to leverage regulatory demands as a chance to upgrade defenses before the inevitable breach. Executives must wake up to invest in their people and innovative technologies that pay off when the periodic crisis strikes.
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