While many U.S. companies beef up their cybersecurity measures, studies show little attention is being paid to requiring their business partners to do the same.
As a result, it becomes easier for hackers to simply slip in through the third-party-vendor back door. The New York State Department of Financial Services (NYDFS) recently released the results of a cybersecurity survey of 40 banking organizations, including many of the largest institutions it regulates. The report Update on Cyber Security in the Banking Sector: Third Party Service Providers, reveals that banks are not conducting sufficient due diligence regarding the privacy and data security measures adopted by third-parties vendors that have access to the banks’ sensitive financial data.
As the NYDFS report highlights, third-party vendors, ranging from check/payment processors to legal counsel to HVAC technicians, often have access to bank technology systems, which can provide a potential point of entry for hackers. However, many of the financial institutions surveyed are simply taking the word of their business partners that they have the proper cybersecurity protections in place.
Below are several of the NYDFS survey’s key findings:
Nearly 1 in 3 of the banks surveyed do not require their third-party vendors to notify them in the event of cybersecurity breach.
Less than half of the banks surveyed perform any on-site assessments of their third-party vendors.
Approximately 1 in 5 banks surveyed don’t require third-party vendors to represent that they have established minimum information security requirements.
Nearly half of the banks do not require a warranty of the integrity of the third-party vendor’s data or products (e.g., that the data and products are free of viruses).
In light of its findings, the NYDFS plans to move forward on banking regulations intended to strengthen the cybersecurity standards for third-party vendors. Superintendent Lawsky said: “A bank’s cyber security is often only as good as the cyber security of its vendors. Unfortunately, those third-party firms can provide a backdoor entrance to hackers who are seeking to steal sensitive bank customer data. We will move forward quickly, together with the banks we regulate, to address this urgent matter.”
The agency is also in the process of conducting a similar survey regarding the cybersecurity of third-party vendors who service the insurance companies it oversees.
Are Stay Interviews the Key to Retaining Top Talent?
Retaining top talent continues to be one of the greatest challenges facing employers today. Even in an employer’s market, the loss of a key employee can disrupt operations and result in significant costs. While compensation plays a role, long-term retention often depends on workplace culture, communication, and employee engagement. One increasingly popular strategy for improving […]
Secured transactions form the backbone of a wide range of business dealings, including business loans, mortgages, and inventory financing. Because the stakes are often high and relatively minor oversights can have drastic consequences, lenders and borrowers should thoroughly understand how to form an enforceable security agreement that protects their legal rights. What Is a Secured […]
Don’t Cash a “Paid in Full” Check Without Understanding the Legal Implications
Cashing a check marked “paid in full” can be a risky endeavor, particularly if you don’t fully understanding the legal implications. If you are owed more than the amount of the check you accept and deposit, you may waive your right to collect the full disputed amount. That is why you should consider either rejecting […]
Changes to Qualified Small Business Stock Will Benefit Startup Founders and Investors
The One Big Beautiful Bill Act of 2025 (OBBBA) significantly impacts federal taxes, credits, and deductions. A key change relating to Qualified Small Business Stock (QSBS) allows greater tax-free gains for investments in startups and other qualifying small businesses. Company founders and other investors should understand how the enhanced tax strategy works or risk missing […]
Corporate Consolidation and Antitrust Issues in Mergers
Corporate consolidation involves two or more businesses merging to become a single larger entity. The result is often a stronger and more competitive company that can better navigate today’s competitive marketplace. What Is Corporate Consolidation? Corporate consolidation closely resembles a basic merger transaction. The primary difference is that a consolidation creates an entirely new business […]
Business law plays a critical role in nearly every aspect of running a successful enterprise, from negotiating a commercial lease to drafting employee policies to fulfilling corporate disclosure obligations. Understanding what is business law and your legal obligations can help your business run smoothly and build productive relationships with clients, business partners, regulators, and others. […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
