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Cyber-attacks pose a threat to all businesses, but their impact on those in the financial services industry is especially severe.
Unauthorized access to sensitive data can leave investment advisory firms on the hook for hundreds of thousands of dollars in legal fees, penalties, and lost clients.
These companies need to understand their current risk level and develop an IT security strategy that protects their valuable information, clients, and reputation. So, let’s start with the basics…
What is an IT Risk Assessment?
It is a process that:- reviews the potential cyber-threats that a company may face
- weighs the likelihood of any of them happening
- anticipates their potential impact on daily operations and stored data
Once all of these variables are examined and measured, the business being assessed can then be in a place to prevent most breaches, minimize the impact of incidents that do occur (including data theft), and keep its name from being noticed for all the wrong reasons. The assessments can also be used to accurately gauge the financial impact related to the risks.
Close Off Security Gaps
A risk assessment report serves as a set of ‘to do’ lists for rectifying security problems. They are a snapshot of a company’s security layout, allowing managers to quickly see weaknesses like applications open to compromise and servers that are missing important patches.
Determine Security Requirements
An assessment determines the strengths and weaknesses of a firm’s security setup, given its hardware and software configurations, and can subsequently be used to create strong network architectures, develop security policies, and put together business continuity plans.
Reduce Security Costs
Because they identify security problems before the issues can be exploited, risk assessments provide an opportunity to lower overall security costs. It’s less expensive to fortify defenses than it is to clean up after a crisis.
Prove Due Diligence
IT risk assessments also act as proof that a financial advisory firm is complying with government regulations and adhering to best practices. Regulators like the SEC want evidence that companies have appropriate levels of data protection, while clients may ask for proof that good security practices are in place.
Justify Security Expenses
No one in the financial services industry will dispute the need for security, but budget planners and managers want to see figures that justify any expense. An IT risk assessment can calculate the cost of improving IT security and estimate the benefits. It can also show recovery costs from the aftermath of a successful breach.
Bottom Line
IT risk assessments inform company management about the present security landscape of the business and the steps needed to mitigate risks. In today’s potentially perilous digital climate, they’re the start of any due diligence process.
Has your firm conducted a risk assessment in the past year? Did the results introduce changes? Let us know your thoughts in the Comments box below.
And to follow-through on the tips introduced in this short article, be sure to download your free guide, Investing in High Net Worth Clients: The LA Investment Advisor's Guide to Using Technology to Manage and Grow Your Firm.
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