The Securities and Exchange Commission (SEC) has made it abundantly clear, regulatory compliance programs must be prioritizing cybersecurity initiatives, or risk the potentially devastating consequences – both for their firm and their clients. While larger financial firms may be able to funnel significant resources into their cybersecurity program, small firms, including investment advisers and broker-dealers, may not have that kind of budget.
But a lack of budget doesn’t equate to a lack of risk.
Cybersecurity isn’t a new issue, however, given the increasing sophistication of cyberattacks, the risk has evolved and can no longer be considered a second-tier priority. Regulators, including the SEC and Financial Industry Regulatory Authority (FINRA) are putting their money where their mouth is, so to speak, releasing proposed rules, providing informative resources and enforcing regulatory action on those who fail to comply with the necessary regulations.
All of which is to say, if cybersecurity regulatory compliance isn’t on your list of priorities for 2023, you may want to reconsider.
Prioritizing your cybersecurity regulatory compliance within your firm
If you had more compliance budget, what compliance initiatives would you prioritize? According to a recent poll, 40% of respondents stated they would invest more in cybersecurity solutions. And while finding a technology or platform to help enable your cybersecurity initiatives is a great answer to the question of cyber protection, certain budgetary constraints don’t always make it feasible. So, what can you do?
1.Make cybersecurity education mandatory.
When it comes to your cyber protection, your employee base is your best form of defense…if they understand the risks and what actions they should be taking to prevent, and in the worst case, report on cyber attacks. Regularly scheduling educational sessions, including webinars and online courses, will provide your employee with the basics they need to help defend against such tactics as:
- Phishing attacks.
- Malware attacks.
2. Regularly review your policies and procedures to ensure they reflect current regulations.
Federal and state cyber regulations have been forced to evolve in order to keep up with the heightened cybersecurity risk we now face. As such, your policies may not reflect the most current requirements for your firm. Staying up to date on SEC and FINRA regulations, and adjusting your policies to match any new rulings, will ensure you remain compliant. However, it doesn’t end there. Once you have the written policy in place, it is essential for your firm to implement accurate processes and procedures which reflect what you’ve formally stated in your cybersecurity policy. Both your policy and your procedures should include:
- How you plan to train new and existing employees.
- What steps are to be taken should a cybersecurity incident occur.
- Specifics around data loss prevention.
3. Test and test again.
What’s the best way to determine if you have the correct policies and procedures in place to properly safeguard your firm against cyber risk? Test them. You should regularly test every aspect of your cybersecurity program to ensure it is being properly maintained and that any potential risks are being addressed up front.
Trust us, you’ll be happy you noticed a glitch in your system before it leads to a cyber incident plastered across compliance news outlets.
Still have questions? Level up your cybersecurity knowledge with RIA in a Box’s comprehensive cybersecurity guide!