CIOs and CTOs!...9 steps to navigate the latest FCA and PRA cybersecurity concerns

As ?digital transformation in financial services accelerates, businesses and hence CIOs and CTOs are facing increased scrutiny from regulators like the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).

In light of the latest CBEST active audit findings, these bodies are sharpening their focus on cyber resilience, aiming to ensure that financial institutions are well-protected against the growing landscape of cyber threats.

This and other areas of concern stem from

1. A recognition that the financial services sector remains a prime target for cyberattacks because implications of successful attacks extend beyond individual institutions to the broader stability of the financial system and
2. Many still have proven gaps which can be easily remedied

Regulatory Expectations: FCA and PRA Cybersecurity Priorities

Both the FCA and PRA have issued several directives aimed at strengthening cybersecurity in financial services. Key priorities include:

?1. Operational Resilience: Institutions must ensure they can remain operational even in the event of a cyberattack. This requires stress testing, scenario planning, and a deep focus on business continuity strategies.

2. Cyber Governance: Boards and senior management are expected to take greater accountability for cybersecurity. This includes having clear cyber risk governance frameworks in place, regularly reviewing cyber defenses, and embedding a culture of security awareness across all levels of the organization.

3. Third-Party Risk Management: The FCA and PRA stress the importance of conducting thorough due diligence on third-party vendors. Institutions must ensure that these vendors have strong security practices and must also have contingency plans in place should a critical vendor be compromised.

4. Incident Response and Reporting: Regulators require institutions to have effective incident detection and response capabilities, alongside transparent reporting mechanisms. The ability to identify, contain, and recover from cyber incidents is paramount.

5. Customer Protection and Data Privacy: As part of their focus on consumer protection, the FCA is particularly concerned with how firms protect customer data. Failure to safeguard sensitive information or respond adequately to breaches can result in significant regulatory penalties. Logging and forensics still show deficiencies.

9 Practical Steps for CIOs and CTOs to Address Regulatory Concerns

First it’s important as a CISO that I emphasise that security, should help the business to preserve critical revenue streams, reduce capital expenditure and to save money through cost avoidance and reduced break on fix costs, for example.

Primarily we do this by lowering risk both of attacks, the incurrence of regulatory and fines and improving operational efficiency.

The most effective way to do this I have seen is through cybersecurity improvement programmes because they can provide a strategic advantage, transforming reactive security postures into proactive, sustainable and commercially advantageous defences.

In general, however, here are some practical steps to help:

1. Make security a serious commercial proposition: to the board by using a commercially savvy CISO. It's not just a case of 'we have to do it', this may even help you increase revenue....
2. Enhance Cyber Resilience through Collaboration: Partner closely with your supply chain and your CISO to ensure that cybersecurity measures align with regulatory guidance. Regularly review cyber defence strategies, and ensure that systems can withstand attacks and recover swiftly. This may include implementing advanced threat detection tools, multi-factor authentication, and encryption protocols.
3. Strengthen Governance and Accountability: establish clear governance frameworks. Assign specific roles and responsibilities for cyber risk management across the organization, and ensure that regular cybersecurity assessments are conducted by internal audit or third-party experts.
4. Invest in an outsourced SOC: it will save you serious money compared to using an in-house team.? The commercial advantages outway the internal ?staff costs and any minor, potential loss of culture or control.
5. Conduct Stress Tests and Simulations: Regularly test your operational resilience by running simulated cyberattack scenarios. These exercises should involve all critical areas of the business and help identify gaps in your incident response and recovery processes.
6. Review and Bolster Supply Chain Risk Management: Ensure that your organization has rigorous third-party risk management protocols in place. This includes regular audits of vendors, ensuring they meet your security standards, and requiring them to notify you promptly of any security incidents. Ensure that contracts with critical third parties include robust security clauses
7. Refine Incident Response Plans: A robust incident response plan is crucial for meeting regulatory expectations. Regularly review and update your response plan, ensuring that it covers detection, containment, and communication protocols. Also, make sure your team can engage with regulators promptly and transparently if an incident occurs.
8. Implement Zero Trust Architecture: Move towards a zero-trust security model where no entity, whether internal or external, is trusted by default. This will ensure stricter access control, limiting the potential damage of an insider threat or an external breach.
9. Build a Security-First Culture: Empower employees at all levels with cybersecurity awareness training. Encourage a culture where security best practices are embedded into everyday operations, and ensure that staff recognize the importance of protecting sensitive information.

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How a CISO or CISO as a Service Can Help

As a senior CISO, I bring not only technical expertise but deep commercial and delivery experience.

That means I can work in partnership with you and help you save you money, marry up your desired level of commercial and technical maturity using measures such as Gartner Best in Class, Industry Standard etc. with a pragmatic application of controls which are in-line with regulatory expectations.

I work as a bridge between IT, legal, compliance, and business operations, ensuring that cybersecurity efforts are holistic, proactive, and aligned with the latest regulatory mandates. I can help you:

Conclusion

In today’s high-stakes environment, where the FCA and PRA are sharpening their focus on cybersecurity,

With a commercially astute CISO, a comprehensive strategy and cost reducing improvement programmes financial institutions can not only meet regulatory expectations but also stay ahead of the constantly evolving threat landscape.

Reach out to me if you’d like to trade notes

Roy has previously served as a CISO at the FSA/FCA, 30 years' experience and has also delivered major business and digital programmes.