Financial institutions must attempt to identify and address potential risks to their business and customers, investors, and partners. Some common areas where risk is overlooked include:
Mergers and acquisitions: Most financial institutions have processes in place that manage the financial, regulatory, and cybersecurity risks associated with M&As. However, due diligence assessments often overlook critical data about the acquired financial institution. For example, does a financial institution gain a complete understanding of a potential acquisition’s cloud infrastructure and its security configurations? Or test application code for vulnerabilities that can be exploited to steal sensitive data or take down applications and services?
Third-party risks: All companies have third-party trust relationships and dependencies. These include other financial institutions, cloud services providers, SaaS vendors, application developers, and the creators of code libraries used by their applications. These relationships introduce significant risks as cybercriminals can exploit them to bypass defenses. However, many companies lack full visibility into their supply chains and have not performed in-depth risk assessments.
Software development life cycle and change management: There are significant risks in the software development life cycle (SDLC) and change management processes, due to the critical nature of these processes in ensuring the quality and stability of software applications. SDLC is a structured approach to software development that includes planning, design, coding, testing, integration, and maintenance. Any weaknesses in these phases can lead to significant issues, including security breaches and system failures.
Change management ensures changes to software are planned, approved, and implemented in a controlled manner to prevent unexpected outcomes. Any deviation from established change management process can result in risks such as software instability, data loss, or regulatory non-compliance.
Identity and access management (IAM): IAM is critical for ensuring the security of an organization’s systems and data. However, some areas of IAM risk can result in MRAs. One area is the failure to regularly review and update access controls, which can lead to unauthorized access to sensitive data. Another is the lack of segregation of duties, which can result in conflicts of interest and potential fraud. Additionally, weak password policies, insufficient authentication mechanisms, management of privilege, use of multi-factor authentication (MFA) and inadequate monitoring and logging are also significant risk areas that can lead to regulatory MRAs. IAM systems should be designed with a strong focus on risk management, compliance, and governance to avoid these potential MRA related issues.