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Senate Committee Hearing Focuses on Cybersecurity in Financial Sector

Top industry leaders, including representatives from EY and Goldman Sachs, testified on cybersecurity risks before a U.S. Senate committee recently. The hearing, “Cybersecurity: Risks to the Financial Services Industry and Its Preparedness,” and panelists’ testimony are available here. Bob Sydow, Principal and Americas Cybersecurity Leader at EY, testified that EY surveys have found 43% of boards have sufficient cybersecurity knowledge for effective oversight of cyber risks and that cybersecurity has become the number one concern among boards of directors and chief risk officers for those institutions surveyed. Sydow’s testimony did not specifically refer to mutual fund independent directors. “The primary challenge that directors and their firms grapple with is how to keep pace with fast-changing cyber risks in terms of the vulnerabilities or the new sources of risk that they create,” Sydow testified. The most effective boards are implementing more robust cyber risk governance in five ways, Sydow continued: By establishing and assessing cyber risk management maturity; measuring and evaluating cyber risk; developing more robust and transparent management reporting on cyber risk; apportioning oversight duties across the board and committees; and overhauling cyber training for directors. Other participants described the challenges facing financial firms in combating cyberattacks.  A recent report in the New York Times describes the growth of the cybersecurity industry and the military-like strategies banks adopt to combat cybercrime. Similarly, an article in the Wall Street Journal describes how blockchain can be a powerful tool against cyber attacks because the technology’s cryptography-based authentication, decentralization and immutability can effectively ward off hackers.