In reaction to two surveys of more than 150 regulated banking organizations and 43 regulated insurers in New York, the state’s Acting Superintendent of Financial Services issued a letter to all Financial and Banking Information Infrastructure Committee (FBIIC) Members addressing the need for potential new cybersecurity regulations in the financial sector.
The New York State Department of Financial Services (NYDFS) expects that the November 9, 2015 letter will trigger more “dialogue, collaboration and, ultimately, regulatory convergence” among New York agencies on “strong” cybersecurity norms for financial institutions.
In the letter, Anthony J. Albanese – Acting Superintendent of Financial Services – discusses the NYDFS’ review of the two surveys which were conducted in 2013 and 2014. The surveys asked about the banks’ and insurers’ programs, costs, and future plans pertaining to cybersecurity. Albanese writes that the findings of those surveys led to some additional actions:
- The NYDFS expanded its information technology examination procedures to focus more attention on cybersecurity;
- NYDFS began conducting risk assessments of its financial institutions in late 2014 and early 2014 to compile information about risks and vulnerabilities;
- In response to a realization of the financial industry’s reliance on third-party service providers for banking and insurance functions, the NYDFS conducted an additional survey of regulated banks in October 2014, specifically pertaining to banks’ management of third-party service providers; and
- NYDFS published an April 2015 update to its earlier report with the most critical observations.
Those reports and risk assessments as well as the “dozens of discussions” the NYDFS has held with New York financial entities, cybersecurity experts, and other stakeholders have led to several “broad conclusions,” Albanese writes:
- Financial institutions need to stay “dynamic” to keep pace with ever-changing technological advances and sophisticated cyberthreats;
- Financial institutions’ third-party service providers must also have sufficient cybersecurity protections as these service providers often have access to an institution’s sensitive data and information technology systems; and
- Cybersecurity is a “global concern” that affects every industry as evidenced by recent data breaches.
My next post will analyze the proposed regulatory actions and requirements NYDFS is considering for financial institutions and insurers.
Randall J. Collins is a law clerk in Fox Rothschild’s Philadelphia office.