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NYDFS Issues Supply Chain Management Guidance

The New York State Department of Financial Services recently issued recommendations to financial institutions in the aftermath of the SolarWinds cyberattack. In that attack, hackers inserted malware into SolarWinds software which was then distributed to SolarWinds’ customers (many of which were financial institutions). After discovery, SolarWinds released a series of hot fixes to address vulnerabilities in their software associated with the attack. Although NYDFS found that most companies responded quickly to patch the vulnerabilities, it did identify additional steps to reduce supply chain risk:

  • Properly diligence third party service providers’ potential cybersecurity risks, and include in vendor contracts -particularly critical vendors- provisions that ensure cybersecurity practices and cyber hygiene can be monitored, and that require immediate notice of any cyber event that could impact the company.

  • Assume any software from service providers might be compromised. Thus authorize only as-needed access and monitor for malicious activity.

  • Have a vulnerability management program with patch rollback procedures to ensure timely patches.

  • Update incident response plans to address supply chain compromises.

As we have reported recently, NYDFS is actively enforcing the cybersecurity rules, and these recommendations can be read in context of those rules.

Putting it Into Practice: These NYDFS cybersecurity recommendations highlight for financial services companies the expectations the department has of them with regard to supply-chain risk. Companies would be well-served to review their vendor management practices against these latest recommendations.

Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XI, Number 146
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About this Author

Liisa Thomas, Sheppard Mullin Law Firm, Chicago, Cybersecurity Law Attorney
Partner

Liisa Thomas, a partner based in the firm’s Chicago and London offices, is Co-Chair of the Privacy and Cybersecurity Practice. Her clients rely on her ability to create clarity in a sea of confusing legal requirements and describe her as “extremely responsive, while providing thoughtful legal analysis combined with real world practical advice.” Liisa is the author of the definitive treatise on data breach, Thomas on Data Breach: A Practical Guide to Handling Worldwide Data Breach Notification, which has been described as “a no-nonsense roadmap for in-house and...

312-499-6335
Kari Rollins Intellectual Property Lawyer Sheppard
Partner

Kari M. Rollins is a partner in the Intellectual Property Practice Group in the firm's New York office.

Areas of Practice

Ms. Rollins focuses her practice on privacy and complex commercial litigation matters. She has successfully represented clients in the financial services, audit and accounting, food services, retail, and fashion industries before state and federal courts, as well as in front of state attorneys general, federal regulators, and U.S. and international commercial arbitration forums....

212.634.3077
Elfin Noce Business Trial Attorney
Associate

Elfin L. Noce is an Associate in the Business Trial Practice Group in the firm's Washington, D.C. office.

Practices

  • Litigation

Industries

  • Communications

Education

  • J.D., University of Missouri, Columbia, 2005

  • B.A., Truman State University, 2000

Admissions

  • *Not admitted in District of Columbia; supervised by partners of the firm

  • Missouri

202.747.2196
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