Importance of cyber security
Cybersecurity is a critical component of operational resilience for firms in the financial sector. As financial institutions increasingly rely on digital infrastructure to manage transactions, store sensitive data and provide services, they become prime targets for cyberattacks. Effective cybersecurity measures help protect against data breaches, fraud and other cyber threats that can disrupt operations, damage reputations and result in significant financial losses. By integrating robust cybersecurity practices, firms can ensure continuity of operations, maintain customer trust and comply with regulatory requirements, enhancing a firm’s ability to withstand and recover from adverse events, bolstering overall operational resilience.
The FCA’s stance
Cyber-attacks have increased in number, scale and sophistication. Since 2014, there has been a 1,700% increase in cyber-attacks reported to the FCA, representing a rapidly increasing threat to all financial services firms. The FCA expects financial services firms to be able to protect the sensitive information they hold through the effective management of risk, encryption of data and data recover processes.
All cyber incidents that result in a significant loss of data, affect the availability or control of a firm’s IT systems, affect a large number of customers or result in unauthorised access to a firm’s ICT systems, must be reported under Principle 11 of the FCA Handbook.
Key areas for a strong cyber resilience
The FCA’s expectations regarding cybersecurity, as outlined in their “Cyber Security – Industry Insights” document, emphasise several key areas for firms in the financial sector:
- Governance: Firms should establish strong governance frameworks to oversee cybersecurity efforts, ensuring that responsibilities and accountabilities are clearly defined and understood at all levels of the organization.
- Identification: Firms must identify their critical assets and understand their potential vulnerabilities to cyberthreats.
- Protection: Firms must implement appropriate measures to protect their assets, including robust access controls, encryption and regular security updates.
- Detection: Effective detection systems should be in place to identify and respond to cybersecurity incidents promptly. This includes continuous monitoring and threat intelligence.
- Situational Awareness: Firms need to maintain awareness of emerging threats and issues, adapting their defences accordingly.
- Response and Recovery: Preparedness for responding to and recovering from cyber incidents is essential. Firms should have well-defined incident response plans and conduct regular drills to ensure readiness.
- Testing: Regular testing of cybersecurity measures, including penetration testing and vulnerability assessments, helps ensure that defences are effective and up to date.
These expectations aim to enhance the overall cyber resilience of firms, reducing the risk and impact of cyberattacks on the financial sector.
How Complyport can help
Complyport offers comprehensive IT and cybersecurity audit services that can significantly enhance your firm’s ability to meet the FCA’s expectations for cybersecurity and operational resilience. By conducting thorough audits, we can help you identify vulnerabilities and areas for improvement in your firm’s cybersecurity framework. Our team of specialists provide detailed audit reports and assists in establishing annual IT audit plans, ensuring continuous compliance with regulatory standards. Complyport’s expertise in regulatory frameworks and technical standards, ensures that firms not only protect their critical assets but also demonstrate robust cybersecurity practices to external parties, ensuring that your firm is provided with a proactive approach that aligns with the FCA’s emphasis on governance, protection, detection and response.
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