7 Reasons for CISOs in Financial Services to Automate Cybersecurity Regulatory Compliance

Sep 01, 2021

Banking | 7 min READ

The State of Cybersecurity Regulatory Compliance in the Financial Services Industry

According to Fortunly, the cost of cyberattacks in the banking industry reached $18.3 million annually per company. Businesses and individuals reported a loss of $3.5 billion to cybercriminals in the year 2019 while reporting more incidents of internet crime to the FBI than any year previously, according to the bureau's Internet Core Competency Certification (IC3) 2019 Internet Crime Report.

Sanjay H. Chaswall

Banking & Capital Markets Growth Leader

Birlasoft

Mark Weston

Co-founder and Chairman

Regulativ.ai

In light of this, spending on cybersecurity training is expected to reach $10 billion by 2027. As cybersecurity threats increase exponentially, so do the number and extent of the regulations that are aimed to protect organizations and their customers, which ultimately puts pressure on the CISOs to keep track of fast-changing cybersecurity regulations, and at the same time, maintaining a strict vigil on third party suppliers. Such risk assessments are often time-consuming and mundane activities for CISOs.

Additionally, manual approaches to counter such threats could make companies more vulnerable. AI and automation are increasingly becoming enablers in the regulatory risk value chain to simplify and speed up cybersecurity compliance. An effective AI-enabled cybersecurity program allows these organizations to protect their critical assets while ensuring they are fully compliant with the cybersecurity regulations laid by government entities.

Reasons to Automate Cybersecurity Regulatory Compliance

Talk to the audit managers about the cumbersome manual cybersecurity regulation compliance process, and they will be quick to recognize the need for automating these processes. For audit managers, manual testing proves to be inefficient and doesn't provide enough data on the operating effectiveness of controls. In such a scenario, automating the regulatory compliance process makes sense as it dramatically improves efficiency and frees up time to invest in cyber resilience, which otherwise suffers .. Besides, automation also significantly reduces costs associated with the high volume of manual effort. Let's look at seven such factors in more detail.

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#1 Shrinking CISO Budgets

A recent study by McKinsey stated that more than 70% of CISOs surveyed report that their budgets for the fiscal year 2021 have shrunk owing to the Covid-19 pandemic. This has led to a limited outlay for compliance, governance, and risk tools. Additionally, for corporate security operations centers, the cost of securing the fundamentals could further limit the budgets for more sophisticated threat-intelligence upgrades, behavioral analytics, and other tooling.

In line with this, automating routine tasks helps free up employees' time for other value-added work. The CISOs' resilience during the Covid-19 pandemic has shown the path towards automation, as highlighted by this Deloitte study. CISOs in the financial services industry are deploying emerging technologies such as cloud, data analytics, and Robotic Process Automation (RPA) as top cybersecurity investment priorities. This was done to emphasize access control, protective technology, and data security. These technologies present new solutions for financial institutions to transform operations and achieve cost reductions eventually.

#2 Shortage of Cybersecurity Talent

The intense focus on cybersecurity highlights the necessity of creating a secure base for digital businesses that shields their organization and clients. This Gartner survey indicates that in most enterprises, the CIO still owns the responsibility for cybersecurity. However, the IT organization alone can't provide cybersecurity anymore; business colleagues must be engaged.

Investing in software that can analyze risks in real-time as well as automate some of the risk assessment processes aids companies in mitigating the problem of talent shortage. This will also substantially reduce the demand on operating security budgeting, allowing organizations to hire security experts for jobs that will have a high return rather than letting them work on outdated legacy processes.

By automating the risk assessment process, the cybersecurity professionals wouldn't need to go through various assessments manually, saving time and cost. Additionally, automation would also make the processes more efficient, allowing businesses to reallocate resources to address other pressing requirements.

#3 Cumbersome Supplier Risk Assessment Processes

A survey by the Ponemon Institute recognized the increasing threat of cybersecurity breaches from third-party vendors. To mitigate these data breaches caused by poor risk management practices, it is prudent to monitor the vendor's cybersecurity situation. Additionally, organizations must understand that once a third-party vendor encounters a data breach, the larger organization is more susceptible to a cybersecurity breach. In view of this, a well-orchestrated vendor risk assessment helps protect the entire business ecosystem from exposure to cybersecurity gaps created by vendors organizations share data with.

This can only happen through automation. Bringing in the organizational hierarchy involved in vendor governance enhances transparency and improves accountability in various departments such as Supply Chain Management (SCM), Risk Management and Mitigation, Compliance Management, Procurement, and Quality. It also addresses gaps or loopholes in the organizational hierarchy to mitigate any potential risk. In short, technology adoption helps companies map vendor risks to the associated regulations, controls, internal stakeholders, and vendors, resulting in improved risk transparency and accountability.

7 Reasons for CISOs in Financial Services to Automate Cybersecurity Regulatory Compliance

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#4 Volatile Regulatory Controls and Policies

Financial institutions need to abide by burdensome compliance obligations, ranging from Payment Card Industry Data Security Standard requirements to the Sarbanes-Oxley Act, with international or regional requirements, such as the General Data Protection Regulation (GDPR) from European Union and the California Consumer Privacy Act (CCPA) amongst man others. To top it all, different regions have different jurisdictions and laws that keep changing frequently in view of increasingly heightened security threats. In addition to dealing with day-to-day banking operations, institutions need to keep track of all compliance mandates applicable to them.

New regulations in the financial sector have forced banks transform their workflows to meet these new requirements in the last few years. Keeping track of changing rules is no doubt challenging for CISOs. Collaborating with the right partner can effectively fill this void by tracking changes in the compliance regulations and policies and updating CISO processes as needed to help them stay up to date and to fine tune their cybersecurity policies accordingly.

#5 Overburdened CISO Staff

According to the Banking Policy Institute, one chief information security officer indicated that he and his team spent nearly 40% of their work time reconciling various cybersecurity compliance frameworks. Automating some processes can significantly help relieve CISOs from manual operations and enhance the regulatory compliance landscape.

An automated system can prompt CISOs to verify at regular intervals about completing crucial assessments, including the annual Cybersecurity Assessment Tool (CAT) and the Ransomware Self-Assessment Tool (R-SAT). Scheduled alerts help in prompting CISOs to conduct annual incident response tests, a gap analysis, and cybersecurity training for employees and the board. Moreover, on-demand reporting can keep all stakeholders informed on the progress of your cybersecurity efforts.

#6 Inability to Scale-up Manual Cybersecurity Regulatory Compliance

In view of heightened safety threats, between 2010 and 2020, hundreds of new cyber regulations, rules, or standards were introduced. This renewed thrust on cybersecurity from regulators has necessitated nearly 98% of companies to comply with two or more cyber compliance standards. In comparison, almost 70% need to adhere to more than five compliance rules. Based on the continued introduction of new cyber regulations, the percentage of compliance is set to increase in the coming years, stated a Coalfire report.

While cyber-attacks seem unavoidable, with an increase in scale and frequency, the manual work only adds to the woes of CISOs in breach detection and timely response generation, which exposes vulnerabilities in customers' data and systems to cyber threats. To eradicate such events, automation can significantly help businesses fasten up their security investigations and necessary enactments. Additionally, continuous monitoring of cyber compliance can also prove to be an effective tool to mitigate new risks emerging from the dynamic cyber threat landscape.

#7 High Vulnerability of Manual Cybersecurity Regulatory Compliance

A recent survey by Ernst & Young states that a typical organization can have over 500 critical controls, each requiring at least 5 hours for testing. The adoption of automated rules decreases the testing time to less than 30 minutes. In another analysis from Coalfire, it was found that most companies now spend at least 40% of their security budgets on compliance. Nearly half spend 20,000 man-hours a year on compliance, and 58% say compliance is a significant barrier to entering new markets.

According to a Compliance report, the manual compliance management and the lack of visibility into the required controls restrict an organization's ability to sustain security controls throughout the year. Frequent or near-real-time evaluation provides timely visibility and higher assurance to all relevant stakeholders – regulatory bodies, investors, and customers – that organizations are functionally secure throughout the year and not just during their annual compliance assessment. Automated compliance effectively attracts customers who have strict cybersecurity or digital privacy controls and are otherwise hesitant to entrust the third party with their data.

In a widely cited estimate, institutions lose nearly three dollars for every dollar of fraud if the associated costs of the breach/fraud are added to the fraud loss itself. In the world, which necessitates heightened security around data, automation undoubtedly is the best bet to enhance the value of security operations.

Applying AI and ML in cybersecurity compliance along with automation technologies can scrutinize millions of security events and identify the threat patterns, from malware exploitation to risk behavior and phishing attacks to malicious app codes.

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