Risk assessments for financial institutions demand forward-thinking insights to protect the confidentiality of your customer data. In addition, they provide additional support during bank examinations. While there are many specialty areas bank examiners review, Bank Information Technology (BIT) specifically is multilayered, requiring deep knowledge of Gramm-Leach-Bliley Act (GLBA) Safeguards Rules. A thorough evaluation and risk assessment from an independent third-party helps ensure your institution is operating under the strongest possible governance practices and policies.
A banking assessment consultant who reviews your internal controls, ACH processes and other IT systems can give your institution stronger insights into your cybersecurity framework, enabling you to meet state and federal regulations while satisfying your bank examiner’s needs.
GLBA Information Security Risk Assessment
During a GLBA Safeguards Rule risk assessment, financial institutions are tasked with identifying, evaluating and mitigating information security risks in order to protect consumer financial information. This protected information also includes details about customers, loan applicants, transactions, loan guarantees, employees and prospective employees. The Federal Reserve or other regulatory agencies may act in response to deficient performance under the Interagency Guidelines Establishing Information Security Standards, for example, by requiring a compliance plan.
As part of the process, your institution will be expected to produce a risk assessment that identifies any internal or external risks “to the security, confidentiality, and integrity of customer information that could result in the unauthorized disclosure, misuse, alteration, destruction or other compromise of such information” and, at the same time, determines whether your current safeguards are sufficient to control the identified risks.
In other words, does your institution have the right tools and processes to protect consumer data and how prepared are you in the event of a data breach? Consider areas like your core processing systems, local-area and wide-area networking, wire transfers and electronic banking, for instance. Each one has a wide attack surface that cybersecurity threats can attempt to infiltrate, requiring a deep attention to detail to determine all possible attack vectors.
A third-party risk assessment partner can bring a wealth of experience in both the financial institution and IT security industries. Their familiarity in both fields helps them identify the unique cybersecurity threats facing the financial and banking industry. A partner with ample experience with technology can help speed up your institution’s reaction times in the event of a breach, enabling a more comprehensive disaster recovery process.
Impact on Bank Examinations
A third-party risk assessment brings another set of eyes that bank examiners appreciate. Bank examiners use your risk assessment to help them understand your systems and what actions you’ve taken to protect them. Guidance from your bank assessment consultant also provides detailed insights beyond compliance matters. Recommendations could include pointers to improve risk controls and mitigation policies, creating a more secure environment. Overall, it puts you in a better light with examiners, as long as your risk assessor’s report is thorough.
Uncovering Noncompliance-Related Risks
A risk assessment isn’t just a way to prepare for a bank examination. In extreme cases, it can also uncover instances of wire fraud, money laundering or other criminal actions. Take this scenario for example:
A bank has worked with a client, a local business, for years. Over those years, the business has run a mass number of transactions. Because the bank has worked with this client for so long, they no longer check its credit worthiness every year. That’s unfortunate, since the business has started to take on water. As it declines, the owner begins to put in transactions against credit that aren’t valid in order to access funds they don’t have. The primary purpose of a risk assessment is to protect the bank, no matter if it’s from poor risk controls or from theft. A risk assessment investigates the technical controls that help insulate financial institutions from those threats specifically.
Anders Audit and Assurance advisors are familiar with the internal controls and processes that protect sensitive information belonging to financial institutions, with the knowledge and experience to guide you to tighter protective procedures. To learn more about our services, and the associated costs, request a meeting below.
