President Donald Trump has signed an executive order addressing cybersecurity. But for financial institutions, is the executive order much ado about nothing? Not exactly.
On May 11, President Trump issued an Executive Order on Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure.
President Trump's executive order demands agency-specific cyber reports within 90 days of the order and requires adoption of digital defense standards, the Framework for Improving Critical Infrastructure Cybersecurity, developed by the National Institute of Standards and Technology (NIST). The order further contains three core priorities: (1) protection of federal networks; (2) updating of antiquated systems; and (3) cooperation among federal agencies. Of relevance to financial institutions, the order likewise reinforces earlier initiatives of the Obama administration to enhance the nation's critical infrastructure, including for banks, that are at the "greatest risk of attacks." To protect critical infrastructure, the secretary of Homeland Security will provide a report to President Trump on the vulnerability of electric utility grids as well as financial, healthcare and telecommunications systems. The government will also work to combat botnets.
As for protecting the public online, the order requires the government to establish policies with an emphasis on cyber deterrence and to hire additional cybersecurity experts to help defend the country from hackers.
Other than the sweeping reviews required by the order, President Trump's cyber order is, in many ways, derivative of President Obama's Cybersecurity National Action Plan (CNAP), issued in February 2016. Under that plan, the Obama administration created a Commission on Enhancing National Cybersecurity, established a federal chief information security officer and focused attention on enhancements to the nation's critical infrastructure. Likewise, the Obama administration released a cybersecurity research and development strategic plan, and developed efforts to "deter, discourage and disrupt" malicious activities, including by state actors.
The Trump executive order is similar in a number of ways in that it largely endorses the Obama administration's approach. For example, it largely builds on CNAP by pushing many of its core initiatives, such as focusing on enhancements to the country's so-called "critical infrastructure." For banks and other financial institutions, the executive order offers little new. And by way of contrast, there is far more attention being directed to New York's new and exceedingly more detailed cybersecurity regulations.
Just days before the order, the American Bankers Association (ABA) urged legislators to establish national data protection standards for companies that handle consumers' payment data, a topic omitted from the President's order. While the financial services industry is motivated to provide such protections—in part by requirements such as those found in the Gramm-Leach-Bliley Act (GLBA), and likewise because of New York's tough new cyber standards—the ABA letter noted that just 0.2 percent of records exposed in data breaches were attributable to the financial sector, according to data from the Identity Theft Resource Center.
Companies that are not subject to legislative or statutory requirements, on the other hand, have a less than stellar track record at protecting such information, the ABA said, noting that 81.3 percent of records exposed in breaches this year were at businesses, including retail. With breaches increasing and affecting even more consumers each year, the time has come for other industries to pick up the slack, the ABA wrote.
"It's time to get serious about building a security infrastructure that brings banks, payment networks and retailers together to safeguard sensitive financial data," James Ballentine, executive vice president, congressional relations and public affairs for the ABA, wrote to the members of the U.S. Senate and House of Representatives. "It's time to pass a strong, consistent national standard for fighting data breaches and give consumers the protection they deserve."
The first step toward protecting federal networks: abiding by the NIST cybersecurity framework, Homeland Security adviser Tom Bossert explained at a press conference about the order. Although the government established the framework in 2013 for private companies, it has yet to follow it. "If we don't move to shared services, we have 190 agencies all trying to develop their own defenses against advanced collection efforts," Bossert explained.
The ABA praised the executive order, which "will enhance the security of government systems and help protect our critical financial infrastructure—and ultimately bank customers—through enhanced information sharing and greater cross-industry collaboration," president and CEO of the group, Rob Nichols, said in a statement. "The financial services industry is committed to help protect our country's critical sectors and economic security. America's banks will continue to work closely with the White House, Congress and others to establish clear lines of public-private communication, while avoiding inconsistent or duplicative regulation that might undermine our efforts to protect banks and the customers they serve."
To read the ABA's letter, click here.
To read the executive order, click here.
Why it matters
The executive order reinforces the initiatives of the prior administration, and should be read in conjunction with efforts by state regulators to bring greater protections to financial networks and customer financial data.