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The landscape for cyberattacks against financial institutions has undergone a significant transformation in recent years. Gone are the days of traditional hacking attempts; today, criminals employ sophisticated social engineering tactics to gain access to your systems.

To stay ahead of these threats, financial institutions must focus on three critical areas:

Staff Training

Educate employees to identify phishing schemes and other common tactics used by cybercriminals

Vulnerability Testing and Patching

Regularly test IT systems for vulnerabilities and apply software patches as necessary

Third-Party Vendor Monitoring

Monitor the cybersecurity defenses of your third-party vendors, as they can be a weak link in your defense

Data breaches that compromise consumer information are a significant regulatory compliance risk under GLBA. Even if a breach doesn’t lead to regulatory issues, it can cause operational disruptions and reputational damage.

Payment Processor/Ach Risk Assessment

When evaluating payment processor relationships, consider the essential elements of vendor risk management: risk assessments, due diligence, and third-party oversight.

The ACH network is convenient, but it also presents elevated risks. Your ACH risk assessment should focus on:

Fraud: Unauthorized debits from consumer accounts
Settlement Errors: Transactions may not be processed with accurate amounts
Insufficient Funds: The risk that originators may be unable to cover transactions
Compliance Issues: FIs must comply with NACHA rules

Identity Theft and Red Flag Risk Assessment

Millions of Americans are victims of identity theft each year. Under FTC regulations, financial institutions and creditors must detect warning signs (Red Flags) of identity theft.

FIs need a written Identity Theft Prevention Program and procedures for monitoring suspicious activity in new or existing accounts.

Remote Deposit Capture Risk Assessment

Many FIs use Remote Deposit Capture technology, allowing consumers to deposit checks on their smartphones. A risk assessment for RDC should focus on:

Legal and Compliance Risks: Assess legal risks associated with clearing and settling RDC deposits
Operational Risks: Faulty technology, ineffective procedures, and poor employee training can lead to processing inaccuracies
Vendor Risk: FIs may assume accountability for a third-party vendor’s performance

Digital Banking Risk Assessment

As digital banking services grow, financial institutions must evaluate risks:

Cybersecurity Threats: Monitor third-party partners’ cybersecurity systems and controls
Potential Compliance Issues: TSPs often focus less on compliance than innovation
Operational Risks: FIs need to vet TSPs thoroughly to ensure they meet expectations for product delivery

The Transformative Power of Integrated Risk Assessments

Financial institutions make poor decisions without accurate risk data. Risk assessments only work if they deliver a repeatable process for evaluating risk across the institution.

By integrating risk assessments on a single platform, FIs can transform risk from a liability into something that works to their benefit. The goal is not to eradicate risk but to understand your institution’s exposure to it.

To learn more about building a stronger risk management program, check out our upcoming webinar: “Decoding Risk: IRM, GRC and Everything in Between.”

Cyberattacks Against Financial Institutions Evolve: Focus on Social Engineering and Vendor Risks