The Economic Impact of Cyber Attacks
Cybersecurity Risk Management for the Financial Services Industry
For more than five years and counting, the financial services industry has been the primary target of cyber attacks. In fact, it's not a close competition — financial services firms are 300 times more likely to suffer a cyber attack than other companies. Unfortunately, the frequency, sophistication, and severity of these attacks are only increasing, making it a growing concern for the industry.
To combat these threats, it is crucial for those in the industry to understand the types of cyber risks they face and take the necessary measures to protect their firms. This requires a deep understanding of cyber attacks and their methods to develop effective defense strategies. If you are a financial services company without a cybersecurity risk management plan in place, here's what you need to know.
Table of Contents:
- What is a Cyber Attack?
- Who Commits Cyber Crimes?
- How Could a Cyber Attack Impact Your Company?
- The 3 Most Common Types of Cybersecurity Risks
- Taking Stock of Your Financial Service Company’s Security Risks
- Where to Start With Your Cybersecurity Risk Management Plan
- Ensure Compliance With the FTC Safeguards Rule
- Contact a Managed Security Service Provider
What is a Cyber Attack?
Cyber attacks are a type of digital assault performed by individuals or groups who are using computers to attack one or more computer systems or networks. Malicious actors can use many different techniques to gain access to sensitive information or systems. Botnets, malware, malicious emails, hacked social media accounts, and denial-of-service (DDoS) attacks are all common tools of the trade for cybercriminals.
The scale of the crime can range from scams for petty sums of money to devastating attacks that have a lasting economic impact, such as the one described here that cost an engineering firm in NYC $50,000 a day (not to mention irreparable damage to the company’s reputation). Either way, something as seemingly harmless as opening an email can launch a crisis without proper cybersecurity precautions in place.
Who Commits Cyber Crimes?
It may seem counterintuitive, but not all cyberattacks on financial institutions are motivated by money. In reality, there are a variety of motivations that can spur a malicious actor to commit cybercrime. Here are a few of the main types of attackers that could threaten your company’s cybersecurity:
- Cybercriminals: Individuals or small groups of people motivated by money might set out to commit a cybercrime in the form of petty theft. The idea is to scam you out of your money by first convincing you to provide sensitive information, then accessing your funds fraudulently.
- Cyberterrorists: A cyberterrorist (or a “hacktivist”) is generally motivated by an extreme ideology or a grudge and may be seeking leaks, defamation, DDoS attacks, or other outcomes that would harm your reputation.
- State-sponsored Actors: Anyone acting on behalf of a nation-state (such as via an intelligence agency) is a state-sponsored actor. Their political or geopolitical opponents are at risk of dangerous cyberattacks, disruptions, and espionage.
How Could a Cyber Attack Impact Your Company?
Financial impacts are really only the tip of the iceberg when it comes to cyberattacks. If your company were to fall victim to an adverse cyber event, impacts could potentially take the form of:
- Loss of IP
- Loss of strategic information
- Increased cost of capital
- Reputational damage
- Loss of data and equipment
- Loss of revenue
- Bad PR
- Customer data exposure
- Regulatory penalties
- Court settlements & fees
- Breach notifications
This is still only a partial list. A worst-case scenario could cost your firm its livelihood (as in the case of IP theft) and close the company down. The reality is that 42% of small businesses have experienced a cyber attack within the last year.
Why is it, then, that more than a quarter have yet to put precautionary cybersecurity measures in place? Part of it comes down to not knowing what you don’t know. It’s important to understand exactly what kinds of risks are out there — and what it takes to combat them.
The 3 Most Common Types of Cybersecurity Risks
In the popular imagination, cyber attacks are often thought to be elaborate schemes in which hackers painstakingly break into a system with flashy gadgets in some dark command center and take control. The reality is a lot more subtle.
Many cybersecurity risks are realized simply because friendly users lack awareness of the threat and offer up access to the system (or a personal profile, a login, or other sensitive data) freely and unknowingly. Here are three of the most common forms of cyber attacks that threaten financial services companies:
- Phishing Attacks: In these scams — which are common in banking malware — the user is tricked into sharing personal information by a “phishing” message that seems to have come from a trustworthy entity when in reality it’s from the cyber criminal. This information could then be used to gain access to accounts or cause other trouble.
- Ransomware Attacks: Ransomware is an attack that typically enters a system through a harmful file download, and then locks the user out of the system through malware encryption until a sum of money is paid as ransom.
- Web Application Attacks: Cybercriminals committing web application attacks will locate vulnerabilities in popular online applications and then attack users through those vulnerabilities. This attack might grant remote access to the criminal and risk a major data breach.
Of the three, 94% of attacks against the financial services industry are forms of web application attacks such as SQL Injection (SQLi), Local File Inclusion (LFI), Cross-Site Scripting (XSS), or OGNL Java Injection. These attacks allow malicious actors to take over accounts and gain unauthorized access to sensitive data, and they’re always happening somewhere. In fact, attacks like these occur more frequently than once a minute.
This underscores the importance of financial services cybersecurity. A robust cybersecurity risk management plan (and a recovery plan in case of a breach) must be implemented to protect your company.
Taking Stock of Your Financial Service Company’s Security Risks
One of the first steps in cybersecurity risk management is to take a hard look at your gaps and vulnerabilities. Unless you’ve already cultivated a culture of security, your financial services company may not (yet) be able to answer yes to all five of these critical questions:
- Do you have a cybersecurity program?
- Do you have a security awareness program?
- Are you following a cybersecurity framework?
- Do you have cybersecurity insurance?
- Do you have a team to execute your security strategy?
Initiatives like security awareness training and phishing testing are great tools to support your goal to avoid cyber extortion. However, they’re just the beginning. Truly creating a culture of security will require a detailed cybersecurity risk management plan that incorporates a combination of risk assessments, a compliance framework, and a security program.
Where to Start With Your Cybersecurity Risk Management Plan
The best cybersecurity defense will involve as many layers as possible. A formal risk assessment is a great launching point, and further, periodic risk assessments should become a part of your company’s cybersecurity routine. A certified cybersecurity professional should complete such assessments on a regular basis.
The results of the assessment will help you to identify the precise strategies necessary to achieve regulatory compliance and peace of mind. Many key elements can come into play when monitoring and maintaining cybersecurity risk levels, such as:
- Password Protection: Implement security policies within your network by restricting USB file storage access, enforcing strong password policies, setting screen timeouts for users, and limiting user access.
- Security Awareness Training: Invest in training programs for your users to educate them on data security, email threats, and company policies and procedures. The human element is one of the biggest weak points in security.
- Advanced Endpoint Protection: Shield your computers and data from malware, viruses, and cyber attacks with advanced endpoint security. Traditional antivirus software is no longer enough. The latest technology can even reverse the effects of a ransomware attack.
- Dark Web Monitoring: Utilize dark web scanning services to stay informed in real time about any exposed passwords and accounts on the dark web, allowing you to take proactive measures to prevent data breaches.
- SIEM (Security Incident & Event Management): Implement a SIEM solution to collect logs from network devices and computers, analyze the data, correlate it with threat intelligence feeds, and provide actionable insights to thwart attacks.
- Web Security: Stay ahead of emerging internet threats by using web security products that can detect and block threats within seconds before they reach users.
- Encryption: Enable encryption of hard drives and file systems whenever possible, including encryption of files at rest, in motion (such as file transfers), and especially on laptops.
- Backup and Disaster Recovery: Regularly back up your data both locally and in the cloud, and include a plan for spinning up servers and accessing data in the event of a disaster. It is essential to test backups regularly.
Ensure Compliance With the FTC Safeguards Rule
The Federal Trade Commission (FTC) first established the Safeguards Rule in 2003 to ensure the protection of consumers' personal information. The Rule was updated in 2021 to reflect advancements in technology, and businesses are now required to comply with these updated standards. The deadline to meet these requirements was recently extended by the FTC to June 9, 2023. All non-banking financial institutions (including some financial services companies) are included in the Rule.
This means there’s a real urgency to get your cybersecurity risk management program up and running. It can take months to implement all of the necessary steps to fully comply with the updated Safeguards Rule, and the penalties for non-compliance are stiff — potentially exceeding $43,000 per violation per day.
The FTC requires that you:
- Designate a qualified individual to implement cybersecurity measures
- Complete periodic written reports
- Conduct a risk assessment
- Implement an Information Security Program
- Deliver staff training
- Monitor and test systems and procedures
- Review your service provider
- Update your program regularly
- Implement an incident response plan
You can learn more about these requirements in our business owner’s guide to the FTC Safeguards Rule. It’s crucial to get started as soon as possible so that you don’t risk non-compliance. The fastest and most reliable way to begin is to bring on a certified expert in cybersecurity or a qualified managed security service provider to lead and guide you through the process.
Contact a Managed Cybersecurity Service Provider
A managed service provider (MSP) is more than just IT support — it’s a holistic solution that helps your company to mitigate cyber risks and improve cybersecurity through a variety of ongoing and continuously optimized strategies. Not all MSPs are equal, however. The ideal partner combines key qualities like CISSP, CCISO, and Security Plus certifications, sufficient experience, reliable response times, and a transparent approach.
CyberTeam is an established team of experts in the cybersecurity industry with over twenty-five years of experience offering professional services to protect financial services businesses from cyber attacks. Our capabilities include compliance, risk assessment, IT, and cybersecurity. With a team of experienced experts and the latest technology, we’re able to provide the risk management solutions you need to effectively safeguard your company's assets and confidential information, allowing you to concentrate on growth.
If you’re interested in exploring our managed services, start by scheduling a risk assessment to evaluate your cybersecurity weaknesses. In the process, you can also learn about the personalized solutions that will get your business safely on track for compliance with the FTC. Let’s talk — there’s no time to waste.