FCA says Technology and Data are Key Risks for Financial Services Firms
The Financial Conduct Authority recently released its Business Plan and Risk Outlook for 2015.
Technology and data are chief concerns amongst the Risk Outlook for Financial Services firms in 2015.
Technology Gathering Pace
One concern of the FCA is that technology is moving too quickly for Financial Firms to keep up, leading to investment decision making being outstripped. Key decision makers are unable to invest in the latest technology as they do not fully understand it, and the risks. By the time full evaluations have been carried out, new technology has often appeared.
The FCA acknowledges that digital channels are enhancing customer experiences by speeding up financial services, making them more convenient and the industry more competitive. It has also been highlighted that the pace of change is raising IT security risk concerns as new technology has the potential for misuse.
Firms may benefit from engaging with technology consultants with specific expertise within the Financial field, in order to identify the best technology investments that will be more resilient to future change. Technology recommendations can also be made to ensure that security is not compromised by technology adoption.
Financial Crime Concerns
The FCA has also placed greater emphasis on financial crime – listing it as one of its seven key concerns. It is important that Financial Services firms have robust IT infrastructures that significantly reduce their vulnerability to financial and cyber crime. There are growing concerns about the impact of cyber crime on digital transactions. This is “being exacerbated by the increased reliance on web-based front-end channels that increase the risk of personal data and consumer funds being compromised.”
To combat this risk, Financial Services firms should ensure that all technology infrastructure involved in transactions is extremely robust, and should consult IT experts before investing in these systems.
Another key issue is the effective use and management of data, therefore it is important any partners who would have access to such systems are ISO 27001 accredited. This ensures that the information security management systems used by these organisations have passed strict security audits.
The FCA are concerned about the effectiveness of cyber insurance, with only about 2% of large businesses in the UK with “explicit cyber cover”. Cyber crime is a very real threat, and is of the same, or greater, importance as data security and IT resilience.
Whilst is makes sense for firms to ensure that they are adequately covered by insurance, effective IT solutions will lower an organisation’s vulnerability to cyber crime. A proactive approach and a constantly improving infrastructure that keeps up with criminals’ increasingly sophisticated methods are the best weapons against cyber crime.
The Importance of Business Continuity
Another key concern surrounding IT resiliency is the topic of business continuity.
Many firms are completely reliant on their IT systems, but lack the infrastructure in place to support their business if something were to go wrong.
An expert IT consultant can implement secure backups, failover systems, and complete off-site infrastructure with full remote working capabilities. With the right solutions in place, there is no reason why Financial Services firms cannot continue operating as usual during disaster scenarios – such as a power outage, fire, flood – or any other situation where access to the office location would not be possible.
A recent example of this would be the under-street fire in London’s Holborn area that cut power supplies to many of the surrounding businesses and forced them to evacuate. Some businesses were unable to operate for over a week – whilst those with business continuity plans were working again within a few hours.
To find out more about how Netstar can help your business with backup and disaster recovery plans, get in touch.