Featured Product

    FSI Examines Use of Red Team Testing to Enhance Cyber Resilience

    November 15, 2019

    The Financial Stability Institute (FSI) of BIS published a paper that examines the contribution of red team testing frameworks toward enhancing cyber resilience. The paper describes key components of a red team testing framework, compares the existing frameworks, outlines the benefits and challenges of these frameworks, and highlights the potential cross-border issues in the area of red team testing. In terms of policy implementation, the paper emphasizes that, to take red team testing to the next level, consideration could be given to addressing the legal, operational, and regulatory challenges in coordinating cross-border red team testing for internationally active financial institutions.

    The paper is based on information provided by eight financial authorities and selected private-sector players. Most of the surveyed jurisdictions have red team testing frameworks in place, although the objectives and implementation details may differ. The paper covers the red team testing frameworks for financial institutions in EU (including the Netherlands), Hong Kong SAR, Saudi Arabia, Singapore, and the UK. The paper highlights that the international standards on cyber resilience of financial institutions have raised the bar in terms of defining the expectations on firms. Central to this is the use of red team testing as one of the tests that firms can undertake to assess resilience against realistic cyber attacks and strengthen their cyber resilience. 

    Nevertheless, there are challenges to be overcome and certain facilitating conditions appear to be instrumental in supporting effective implementation of red team testing. Such conditions include a conducive governance structure, an engaged board of directors, a supportive risk culture and, critically, the availability of sound professional skills. In certain jurisdictions, an accreditation framework has been established to boost local capacities. One culture-related hurdle to overcome is getting firms and authorities to view a red team test as a “learn and improve” rather than a “pass or fail” exercise. Other challenges in connection with red team testing include the high cost to firms, trust among the involved parties, and data confidentiality.

    Extending red team testing beyond jurisdictional borders is important to minimize potential cyber resilience blind spots, given that cyber attackers could attack any part of the attack surface of a financial institution. In addition, cross-border technological dependencies could give rise to systemic implications if cyber attackers succeed in exploiting vulnerabilities that could trigger such chain events. The paper recommends the following policy actions going forward:

    • Financial sector authorities may wish to clarify how red team tests fit within their strategies to improve the cyber resilience of financial institutions. This will help provide regulatory certainty to firms and prompt concrete actions to improve their cyber resilience postures.
    • Consideration should also be given to clarifying how red team tests fit within an institution’s cyber resilience framework, which in turn should be coherently considered in its enterprise-wide risk management framework.
    • Authorities should continue to assess the effectiveness of their frameworks and use the lessons learned from each test to improve the overall cyber resilience of the financial sector.
    • Authorities may need to enhance cooperation with other relevant authorities and parties to enable effective implementation of the frameworks.

     

    Related Links

    Keywords: International, Banking, Insurance, Securities, PMI, Cyber Resilience, Red Teaming Framework, Cyber Risk, Research, CBEST, TIBER-EU, FSI, BIS

    Related Articles
    News

    EC Issues Regulation on Adjustments to K-Factor Coefficients Under IFR

    The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).

    January 20, 2022 WebPage Regulatory News
    News

    OSFI Issues Results of Pilot on Climate Risk Scenario Analysis

    The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.

    January 20, 2022 WebPage Regulatory News
    News

    ECB Issues Opinions on Green Bonds Standard and CRR Proposals

    The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.

    January 19, 2022 WebPage Regulatory News
    News

    ESRB Explores Policy Response to Risks Arising from Digitalization

    The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.

    January 18, 2022 WebPage Regulatory News
    News

    EU Authorities Address COVID-19 Reporting, MCD, and PSD2 Issues

    The European Banking Authority (EBA) announced that the guidelines on the reporting and disclosure of exposures subject to measures COVID-relief measures shall continue to apply until further notice.

    January 17, 2022 WebPage Regulatory News
    News

    FI Publishes Multiple Regulatory and Reporting Updates

    The Swedish Financial Supervisory Authority (FI) announced that the capital adequacy reporting as at December 31, 2021 must be done by February 11, 2022.

    January 17, 2022 WebPage Regulatory News
    News

    BSP Tackles Aspects of Lending and Islamic, Open & Sustainable Finance

    The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.

    January 16, 2022 WebPage Regulatory News
    News

    US Agencies Issue Regulatory Updates, FDIC Launches Tech Sprint

    The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.

    January 13, 2022 WebPage Regulatory News
    News

    EBA Issues Guide on Bank Resolvability, Consults on Transferability

    The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).

    January 13, 2022 WebPage Regulatory News
    News

    MFSA Publishes CRD5 Updates and Supervisory Priorities for 2022

    The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0.

    January 13, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 7875