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July 25, 2014

Federal Financial Institutions Examination Council (FFIEC) Member Agencies and State of New York to Focus Attention on Cybersecurity

On May 7, 2014 the Federal Financial Institutions Examination Council (FFIEC) highlighted regulatory efforts to enhance financial institutions’ cybersecurity during a webinar for approximately 5,000 chief executive officers and senior managers from community financial institutions. The FFIEC has six voting representatives of member agencies including the Board of Governors of the Federal Reserve System, the Chairman of the Federal Deposit Insurance Corporation, the Chairman of the Board of the National Credit Union Administration, the Comptroller of the Currency, the Director of the Consumer Financial Protection Bureau and the Chairman of the State Liaison Committee. The FFIEC offered this webinar “to raise awareness about the pervasiveness of cyber threats, discuss the role of executive leadership in managing these risks, and to share actions being taken by the FFIEC.”

FFIEC announced a vulnerability and risk-mitigation assessment as well as a regulatory self-assessment of supervisory policies and processes. “These assessments will be conducted later this year and will help the FFIEC member agencies make informed decisions about the state of cybersecurity across community institutions and address gaps and prioritize necessary actions to strengthen supervisory programs. FFIEC members want to provide additional support to community banks, which may not have access to the resources available to larger institutions.” 

FFIEC highlighted key focus areas for senior management and boards of directors of community institutions as they assess their institutions’ abilities to identify and mitigate cybersecurity risks, including:

  • setting the tone from the top and building a security culture;

  • identifying, measuring, mitigating and monitoring risks;

  • developing risk management processes commensurate with the risks and complexity of the institutions;

  • aligning cybersecurity strategy with business strategy and accounting for how risks will be managed both now and in the future;

  • creating a governance process to ensure ongoing awareness and accountability; and

  • ensuring timely reports to senior management that include meaningful information addressing the institution’s vulnerability to cyber risks.

The basic materials utilized in the presentation from the webinar are available on the FFIEC website

In related news, Gov. Andrew Cuomo announced on May 6 that he has asked the New York Department of Financial Services to conduct cybersecurity assessments of financial institutions to ensure that they are appropriately protecting sensitive customer data. State-chartered banks, credit unions and foreign banks whose US headquarters are in New York will all be subject to the examinations. 

Read more.

©2014 Katten Muchin Rosenman LLP

About the Author

Jeffrey M. Werthan, Mergers Acquisitions Attorney, Katten Muchin law firm
Partner

Jeffrey M. Werthan is head of the firm’s Banking practice. He has extensive experience representing clients in connection with bank formations, both public and private capital raises, mergers and acquisitions of financial institutions, compensation for financial institution executives and bank regulatory and enforcement issues.

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