Cyber threats are unfortunately becoming more and more commonplace in our tech-driven society and that includes making its way into our financial institutions. Banks are seeing increased threats and security issues, no matter their size, and are needing to rethink how they take care of data security.
Not only are cyber threats complex and constantly changing, they can cause major damage to a financial institution both monetarily and in reputation. That’s why the role that cybersecurity decision plays doesn’t come down to just those who work in IT. In fact, it’s now becoming more commonplace to delegate cybersecurity responsibility to those on a bank’s board, such as directors and officers.
As boards of directors take on the roe of cybersecurity leaders within their banks, here are some of the responsibilities they should consider.
Cybersecurity Roles and Responsibilities of Bank Board Members
While technology is changing the way banks operate and banking customers navigate their personal financials, only a small number of board members and executives at a bank have a tech-focused background.
First, banks should be considering the role that bank crime insurance plays in today’s society. Bank crime insurance can provide specialized protection for financial institutions and come in many forms including cyber liability as well as directors and officers insurance, which protects board members from issues related to threats to client information. D&O and cyber liability insurance options should be in place to keep a bank’s board safe from pricey litigation, as well as keep the reputation of a bank and those who work there intact.
When it comes to the responsibilities, directors need to understand and step to cybersecurity as an industry-wide risk management issue, not just an IT problem. Financial institutions are still mainly associating information security with just IT, and even though most of the reporting structures come through the IT department, it shouldn’t be the central focus because those impacts are company-wide.
Board members should also understand the legal and regulatory implications of cyber risks as they relate to their company’s specific circumstances. Responsibility and accountability go hand in hand as executive management and board members are being held more accountable for high-profile breaches.
To help boards understand cybersecurity issues better, there should be adequate access to cybersecurity expertise and discussions about risk management should be given regular time during board meetings. Having more awareness about the state of cybersecurity in the industry and your company will help to stay aware of possible crimes and fallouts.
Also, board-management discussion of cyber risk should contain identification of wat types of risks to avoid, accept, or transfer through insurance, as well as specific plans associated with each approach. Managing cybersecurity effectively means having an understanding of the relative significance of organizational assets. This will help to determine the occurrence by which they will be examined for risk exposure.
About Financial Guaranty Insurance Brokers
Since 1983, Financial Guaranty Insurance Brokers has distinguished itself as a provider of Professional Liability, Cyber Liability, and Crime insurance products for entities of all types. To receive timely, personalized service from a knowledgeable and experienced staff, call us today at (626) 793-3330 to speak with one of our professionals.