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There is no more pressing problem facing business organizations today, of all types, than cybersecurity threats. For a highly regulated industry like banking, regulators are watching closely to see how the IT governance structure at a bank can manage this risk.

Recently, the Federal Financial Institutions Examination Council, which coordinates the examination process at all of the federal banking agencies, issued a new “management booklet” on IT risk management examinations, replacing one that had not been updated since 2004.

Perhaps not surprisingly, given how many well-publicized hacks have occurred in the past decade, particularly in the last year, the new booklet incorporates cybersecurity concepts as part of IT risk management for banks:

  • Board Role.  Starting at the top of the bank, the new guidance requires that the board of directors set the tone and direction for an institution’s use of IT, and says that the board should approve the IT strategic plan, as well as its information security program “to protect the institution from ongoing and emerging threats, including those related to cybersecurity.”
  • IT Steering Committee.  Another cybersecurity requirement in the new booklet is for the board, or a “steering committee” tasked by the board to oversee IT risk management, and to review and determine the adequacy cybersecurity training for staff.
  • CISO.  The “Chief Information Security Officer” is required to inform the board, management and staff of information security and cybersecurity risks and the role of staff in protecting information, and to “champion” a security awareness and training program.

Banks can expect their examiners immediately to begin using this new examination booklet, and therefore would be well-advised to determine compliance with its requirements as far in advance as possible of the next examination.

The new Information Technology Examination Handbook can be found here.

For additional information, please contact Brad Neighbors at

With increased oversight, regulatory scrutiny and risk related to cybersecurity, now is the time for those in the banking industry to be proactive in managing cybersecurity risk. Waiting until a breach occurs to formulate or review your game plan may be “too little, too late”. An assessment of your current cybersecurity preparedness may be the best place to start.


The Federal Financial Institutions Examination Council (FFIEC) recently released a Cybersecurity Assessment Tool to help institutions identify their risks and assess their cybersecurity preparedness. Financial institutions may use the Assessment Tool to perform a self-assessment and inform their risk management strategies. The Assessment Tool contains two basic parts: Inherent Risk Profile and Cybersecurity Maturity. The Inherent Risk Profile assesses existing cybersecurity risks. The assessment includes review of five categories: (1) technologies and connections, (2) delivery channels, (3) online/mobile products and technology services, (4) organizational characteristics, and (5) external threats. It looks at the type, volume, and complexity of each category. The Cybersecurity Maturity evaluation determines the maturity level in five different domains: (1) Cyber Risk Management and Oversight, (2) Threat Intelligence and Collaboration, (3) Cybersecurity Controls, (4) External Dependency Management, and (5) Cyber Incident Management and Resilience. It seeks to determine the extent to which an institution has controls in place for a particular risk and how mature those controls are.

Because the Assessment Tool incorporates cybersecurity-related principles from regulatory guidance, the results of the assessment can help you identify areas in your bank’s current security plan and response program that may need to be enhanced.

An overall review of your security plan and response program in conjunction with the assessment is also a great opportunity to confirm that your security plan and response program are consistent with the requirements set forth in the applicable Interagency Guidance.

Security Plan

The Interagency Guidance Establishing Information Security Standards adopted by the federal banking regulators to implement the federal Gramm-Leach-Bliley Act’s (GLBA) safeguards requirements require institutions to develop an information security plan that contains administrative, technical and physical safeguards to ensure the security, confidentiality, and integrity of customer information, protect against any anticipated threats or hazards to the security or integrity of such information, and protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any customer.

Response Program

The Interagency Guidance on Response Programs for Unauthorized Access to Customer Information and Customer Notice adopted by the federal banking regulators (which expand on the Interagency Guidance Establishing Information Security Standards’ recommendation that institutions implement a risk-based response program) requires institutions to develop a response program which should contain procedures for assessing the nature and scope of an incident and identifying what customer information systems and types of customer information have been accessed or misused; notifying its primary federal regulator when the institution becomes aware of an incident involving unauthorized access to or use of sensitive customer information; consistent with the Agency’s Suspicious Activity Report (“SAR”) regulations, notifying appropriate law enforcement authorities; taking appropriate steps to contain and control the incident to prevent further unauthorized access to or use of customer information (e.g., by monitoring, freezing, or closing affected accounts and preserving records and other evidence); and notifying customers when warranted.

Cybersecurity risk cannot be completely eliminated, but it can be effectively managed. By proactively assessing your cybersecurity preparedness and updating your security plan and response program in an informed manner, you can provide confidence to regulators that you are responsibly managing an increasingly important risk.

W. Brad Neighbors is a partner in Balch & Bingham’s Birmingham office and represents banks and other institutions in transactional and regulatory compliance matters, and regularly advises clients on privacy and data security issues.