The G7 Cyber Expert Group published reports on the G7 fundamental elements for ransomware resilience and the third-party cyber risk management for the financial sector.
The report on ransomware resilience provides financial entities with high-level building blocks to address the ransomware threat. The content is non-binding and meant to incorporate the existing policy approaches, industry guidance, and best practices in place throughout the G7 member countries. The primary focus is on private-sector financial entities and their critical third-party providers. However, financial authorities may also use this report for their own internal ransomware mitigation activities as well as their efforts to promote the resilience of the financial sector. The report describes the following key considerations to address the ransomware:
- Incorporate ransomware resilience within the overall cybersecurity strategy and framework of the entity
- Ensure effective coordination for the broad organizational impact of ransomware through effective governance structures
- Ensure the application of controls to address ransomware risk
- Monitor systems for signs of potential ransomware activity
- Implement established plans in response to ransomware incidents
- Take steps to restore capabilities that may have been impaired by a ransomware incident
- Exchange data, information, and/or knowledge about ransomware incidents and trends with internal and external partners
- Increase ransomware resilience by learning from past incidents
The report on third-party cyber risk management incorporates revisions to the 2018 report on fundamental elements for third-party cyber risk management with an increased focus on management of third-party relationships as well as information and communications technology (ICT) supply chain management. The update report notes the importance of extensive information-sharing and transparency to cope with an ever-changing threat landscape and adds a new element describing role of third-parties in the financial sector. Financial entities and third parties can use these fundamental elements as part of their cyber risk management toolkit while applying a proportionate approach and considering the potential systemic significance of the third-party relationship. Authorities can use these fundamental elements to inform their public policy, regulatory, and supervisory efforts to address third-party cyber risks. The fundamental elements consider the third-party cyber risk management life cycle within an individual entity, the role of a third party to the financial sector, and system-wide monitoring of cyber risk. The fundamental elements outlined in the report are as follows:
- Governance—The governing bodies of entities, such as boards of directors and senior management, are responsible and accountable for effective oversight and implementation of third-party cyber risk management.
- Risk management process for third-party cyber risk—Entities should identify, assess, monitor, and report to the appropriate level of management the cyber risks associated with their third parties, and manage them using a risk-based approach. The risk management process includes identification of third parties and criticality, cyber risk assessment and due diligence, contract structuring and ongoing monitoring.
- Incident response—Entities should establish and exercise incident response plans that include critical third parties.
- Contingency planning and exit strategies—Entities should develop and maintain viable contingency plans and exit strategies that assure the entities’ ability to deliver critical functions. Entities should also understand and validate the existence of their critical third parties’ contingency plans, in addition to the governance policies and standards supporting these plans and strategies.
- Monitoring for Potential Systemic Risks—Third-party relationships across the financial sector are monitored and sources of third-party cyber risk with potential systemic implications are assessed.
- Cross-sector coordination—Cyber risks associated with third-party dependencies across sectors are identified and managed across those sectors. Entities and relevant authorities should continue to seek opportunities to work with their respective counterparts in other sectors and critical infrastructure forums to promote sound cyber risk management, improve cyber resilience, support the sharing of effective practices and, if appropriate, pursue coordinated responses.
- Third parties to the financial sector—Entities remain responsible for ensuring the safe and sound operation of services provided to them by third parties. However, third parties should support entities in identifying, assessing, monitoring, and mitigating cyber risks and in complying with relevant risk management requirements. This especially applies to third parties that support ICT and cybersecurity services.
Keywords: International, Banking, Regtech, Fintech, Cyber Risk, Third Party Risk, Cyber Incident, ICT Risk, Contingency Planning, Systemic Risk, G7
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
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