In a recent Huffington Post article, Shared Assessments senior director Tom Garrubba discussed how third-party risk management has become an important topic to many executives and board members around the world. He recalls a conversation he had with Robin Jones, a member of the U.K.’s Financial Conduct Authority (FCA), during a conference in London. Jones expressed that his “unit [has been] paying renewed focus on technology resiliency and outsourcing.”
Technology resiliency and outsourcing, or “TRO,” appears in the Federal Financial Institutions Examination Council’s (FFIEC) “Business Continuity Planning” booklet. (The FFIEC is a U.S.-based banking regulatory body.) The booklet—which is a part of the FFIEC’s IT Examination Handbook—“provides guidance to assist examiners in evaluating financial institution and service provider risk management processes to ensure the availability of critical financial services.” Specifically, the idea of both technology resiliency and technology outsourcing are mentioned in the section titled “Appendix J: Strengthening the Resilience of Outsourced Technology Services.”
As you can see, TRO has become widely discussed both in U.S. and international regulatory spaces. And in the last 10 years, many regulators have also begun examining how critical third parties could affect the cybersecurity posture of a financial institution through their network access. Below, we’ll walk through what this appendix discusses in regard to TRO and how you can apply those best practices in your organization.
“A financial institution should evaluate and perform thorough due diligence before engaging” with a vendor, according to the previously mentioned appendix of the FFIEC’s booklet. During the pre-contract phase, you’ll want to be sure you understand the extent of the vendor’s access to your network and data as well as the sensitivity of the data they have access to. After the contract is signed, it’s important to have semi-regular meetings with your vendor contact, semi-annual on-site assessments, and an incident response plan in place in the case of a breach that affects your data.
The FFIEC expresses that “the terms of service should be defined in written contracts that have been reviewed by a financial institution's legal counsel and subject matter experts before execution.” In other words, you’ll want to ensure that your expectations of how the vendor should secure your data are built into your contract—and that it’s legally airtight. They should also understand precisely what steps to take in case a breach—particularly one affecting your data or network—occurs.
See Also: Webinar: Legal Requirements For Third Party Cyber Risk Management
The appendix also expresses the need for continuous vendor monitoring, noting that “effective ongoing monitoring assists the financial institution in ensuring the resilience of outsourced technology services.” Tools like BitSight security ratings can help you immediately identify, quantify, and mitigate risk posed by TROs in an ongoing vendor relationship.
While “TRO” isn’t as popular of a term as VRM (vendor risk management), the idea of strengthening the resilience of outsourced technology services is not a new one. Regulators are placing increased importance on a variety of issues with respect to cybersecurity in third-party risk management—so financial organizations need to be prepared to meet and exceed those regulatory expectations.
What’s the biggest struggle your vendor risk managers face when establishing cyber security monitoring processes? From sudden increases in the use of third-parties by your organization, to not knowing which vendors might be impacted by the...
If you’re using a “one-size fits all” approach to managing your vendor lifecycle, you are missing opportunities to save money and operate more efficiently. Vendor management efficiencies don’t end in the onboarding stage: using a...
If you’re experiencing frustrating delays and procedural roadblocks during your vendor management process, you’re not alone. Security managers are seeing an increase in the number of third-parties integrating with their business, and ...
© 2021 BitSight Technologies. All Rights Reserved. | Privacy Policy | Security | For Suppliers
Contact Us | BitSight Technologies | 111 Huntington Ave, Suite 2010, Boston, MA 02199 | +1-617-245-0469