In 2017, the SEC’s Office of Compliance Inspections and Examinations (OCIE) reaffirmed that its examination priorities continue to include cybersecurity. Two years previously, OCIE detailed the following specific areas of focus:
- Governance and Risk Assessment
- Access Rights and Controls
- Data Loss Prevention
- Vendor Management
- Incident Response
These key areas should cover much of the cybersecurity risk that Investment Adviser (“IA”) firms will face. However, for firms with little to no experience in dealing with cybersecurity, covering the above can be a daunting task. By reviewing OCIE examination priorities and taking a step-by-step approach, a firm can create an Information Security Policy (ISP) suitable to its needs. An Information Security Policy should be a comprehensive document outlining how a firm handles matters related to cybersecurity. Everything from high-level policy to technical details will be within the Information Security Policy.
Governance And Risk Assessment
The OCIE 2015 examination priorities for governance and Risk Assessment provides as follows
“Examiners may assess whether registrants have cybersecurity governance and risk assessment processes relative to the key areas of focus discussed below. Examiners also may review the level of communication to, and involvement of, senior management and boards of directors.” – OCIE’s 2015 Cybersecurity Examination Initiative
When dealing with Governance and Risk Assessment, a firm should ask these questions:
- Does the firm handle sensitive data?
- Where is sensitive data located?
- Who can access sensitive data?
- How can sensitive data be accessed?
- Who oversees IT decisions?
Each firm will have their own share of unique risks depending on the type of IA as well as the business environment in which it operates. When evaluating risk, a firm must first identify what is at risk. In most cases, the
answer will include data.
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