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.
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