Commercial and institutional customers have come to expect seamless service, properly cleared transactions and fast, accurate information. But news about major cybersecurity breaches has alarmed consumers, causing banks to redouble their efforts to protect their technology infrastructure. This means the stakes have never been higher for banks and financial services firms, and there are clear trends for cyber risk and security protection in the financial services industry in 2013, according to the experts at Booz Allen Hamilton.
“When we think about the lethal daily threats to the globally integrated financial services industry from nation-states and individuals, it is imperative that Chief Information Security Officers begin looking around corners, talk with each other and better prioritize the real threats to their firms,” said Mike McConnell, Booz Allen vice chairman and former Director of National Intelligence. “Self-evaluation and industry-wide conversations are the new ‘rules of the road’ to creating successful, integrated cyber defenses. The CISO can really drive organization-wide change while still championing efficiency and customer service.”
McConnell is speaking today at Bloomberg’s Enterprise Risk Conference where he will discuss the financial services industry’s responses to state-based and state-sponsored cyber attacks. He added, “There are many cyber trends – including the sophistication and lethality of the attacks – that the financial industry should be aware of. Even though it is difficult to look into a crystal ball and predict the future, these events are happening now and could cause significant reputational, financial and infrastructure damage to any ill-prepared firm. Individual companies should not wait for legislation or an Executive Order to come together with their government counterparts to find dynamic solutions to these big issues.”
Booz Allen works with financial services firms to identify and benchmark best practices and challenges for long-term cybersecurity prevention and protection. This process is part of Booz Allen’s Cyber M3 (Measure, Manage, Mature) capability, which evaluates the maturity of a firm’s cybersecurity programs. Both Cyber M3 and the benchmarking program incorporate technology, business process engineering, human capital development and risk management in developing a comprehensive picture of a firm’s and industry’s cyber readiness.
The Top 10 Financial Services Cybersecurity Trends for 2013:
For 2012 Booz Allen issued its first annual list of cybersecurity trends for the financial services industry. Since then, the industry has experienced a number of high-profile attacks, such as the DDoS attacks on US commercial banks and the New York Stock Exchange.
“In the span of one year, we have seen a significant shift in the frequency and sophistication of cyber attacks on financial services firms. This is perhaps the biggest trend of them all,” McConnell said.
- 1. Business/Information Risk protection is not Just a Technology Issue – Spending on new technology alone is not enough to protect a firm’s information and business. Firms must also invest in people and in fine-tuning processes to ensure, not only the proper use of technology, but that the processes that require interfaces between organizations are well managed and executed flawlessly. No matter how good a technology is, if not used correctly by skilled employees who follow well-defined processes, vulnerabilities will surface that can be leveraged by both internal and external threat actors.
- 2. Data disruption attacks may become data destruction attacks – The potential of threat actors actually destroying data is a major concern among risk and security professionals. Over time, the financial services industry will face threats from extremist groups who, when denied access to weapons of mass destruction, will use cyber as a “weapon of mass disruption.” Additionally, threat actors who mean to disrupt a firm’s business operations to make a statement or prove what they consider a moral point will also utilize destruction of data to ensure they make an impact.
- 3. Nation states and threat actors are becoming more sophisticated – We now have to face more sophisticated threat actors such as smaller nation states and terrorist elements obtaining similar capabilities. The financial services industry must fully understand the entire threat landscape and what this means in terms of employing the right people, technology and processes to ensure business continuity and proper risk management.
- 4. Legislation could push industry standards around cyber risks and improve threat intelligence information sharing – Banks already share information, but they will need to do more in light of possible legislation to set standards for cyber protection. If Congress allows the sharing of important national security information, industry standards could become a benchmark requirement that firms must meet before they are given access to government information. Additionally, such legislation could help in reducing the valid fears of firms in sharing cyber incident information due to the threat of penalties and further regulation. The industry and government must acknowledge and treat firms as part of the nation’s critical infrastructure because a breach at anyone bank or firm can have severe, cascading effects on the nation’s stability.
- 5. Predictive threat intelligence analytics will create a more effective risk management capability – Financial services firms must begin to employ a more predictive threat intelligence capability to determine who might be trying to attack them and how. Focusing on understanding their own individual business risks, (as well as industry risks), and combating real potential threats that could focus on such risks is much more effective than trying to create a defense that could cover any possible threat.
- 6. Vendor Risk Management is becoming an increasingly important concern among firms – Most firms buy much of their information technology and services from suppliers. Therefore, these suppliers’ vulnerabilities become the vulnerabilities of the firms they provide products and services. Firms are becoming more focused on the security requirements for these suppliers and engaging independent third parties to evaluate the risks around such products and services.
- 7. Cyber risk continues to be a board-level issue – Information, legal documents, communications with clients and employees are all becoming more and more electronic every day to include an even greater usage of mobile technologies and social media. The boards of financial institutions must create and embrace a culture that acknowledges the evolving risks and more openly share incident information across the industry, with technology providers and with both law enforcement and the federal government.
- 8. Firms must continue to embrace and adapt to the new “boundless network,” and must also invest in training its workforce to properly access and protect corporate data – Cloud, social and mobile technologies, including “Bring Your Own Device” (BYOD), are simply too cost efficient and effective for institutions to ignore them. Security and risk professionals need to better integrate these technology trends, which will require they embrace the fact that the corporate network now has extended beyond their control. Risk management and mitigation is evolving to better control how corporate data travels these boundless networks and ensuring the education of their employees on the responsibilities they have in securing such data.
- 9. Identity and Access Management is becoming a key security control area in which firms will continue to invest heavily – The days of focusing solely on perimeter defense have long since past. Phishing and other social engineering strategies employed by threat actors have been very effective in allowing them to penetrate almost any network. Banking institutions must assume these actors can get in. Ensuring proper identity of an authorized individual is a key area that is being addressed by all firms in all industries to address this new paradigm. Most threat actors employ a strategy to gain access to networks and information by gaining access to valid authorized credentials of a firm’s employee so that they can go undetected in their actions. Firms will continue to invest heavily in ensuring that an authorized user is actually an authorized user. Additionally, firms will invest more heavily in tracking unusual activity of a user to detect stolen credentials or an insider threat.
- 10. The Financial Services industry will rely more heavily on cyber benchmarking – The FS industry is investing more and more in protecting its information assets and wisely spending these scarce dollars is becoming increasing important, not only from an effectiveness standpoint, but to also be able to articulate to business leaders, the value of such an investment. The FS industry, therefore, will continue to use industry benchmarks to understand how their competitors and suppliers are investing in people processes and technology for cyber risk management.
About Booz Allen Hamilton
Booz Allen Hamilton is a leading provider of management and technology consulting services to the U.S. government in defense, intelligence, and civil markets, and to major corporations, institutions, and not-for-profit organizations. Booz Allen combines deep technical knowledge with expertise in each client’s core mission to deliver proven results. Booz Allen is headquartered in McLean, Virginia, employs approximately 24,000 people, and had revenue of $5.86 billion for the 12 months ended March 31, 2012 (NYSE: BAH).