Like many organizations in the financial services and other sectors, broker-dealers (firms) are the target of cyberattacks. The frequency and sophistication of these attacks is increasing and individual broker-dealers, and the industry as a whole, must make responding to these threats a high priority.
This report is intended to assist firms in that effort. Based on FINRA's 2014 targeted examination of firms and other related initiatives, the report presents FINRA's latest work in this critical area.
Key points in the report include:
- A sound governance framework with strong leadership is essential. Numerous firms made the point that board- and senior-level engagement on cybersecurity issues is critical to the success of firms’ cybersecurity programs.
- Risk assessments serve as foundational tools for firms to understand the cybersecurity risks they face across the range of the firm's activities and assets — no matter the firm's size or business model.
- Technical controls, a central component in a firm's cybersecurity program, are highly contingent on firms' individual situations. Because the number of potential control measures is large and situation dependent, FINRA discusses only a few representative controls here. Nonetheless, at a more general level, a defense-in-depth strategy can provide an effective approach to conceptualize control implementation.
- Firms should develop, implement and test incident response plans. Key elements of such plans include containment and mitigation, eradication and recovery, investigation, notification and making customers whole.
- Broker-dealers typically use vendors for services that provide the vendor with access to sensitive firm or client information or access to firm systems. Firms should manage cybersecurity risk exposures that arise from these relationships by exercising strong due diligence across the lifecycle of their vendor relationships.
- A well-trained staff is an important defense against cyberattacks. Even well-intentioned staff can become inadvertent vectors for successful cyberattacks through, for example, the unintentional downloading of malware. Effective training helps reduce the likelihood that such attacks will be successful.