When cybercriminals strike or sensitive data falls into the wrong hands, the financial stability of the affected business usually suffers. That’s especially true for those in the business of managing finances themselves. Banks, investment institutions, insurance firms, brokerages, advisors and many more have a lot to lose from a data breach, thanks to the trove of sensitive data they must store at all times. When these standards are not followed at financial institutions, particularly secure data erasure and destruction protocols, there may be more at stake than a few dollars and cents.
Evolving data risks
Confidentiality as a top business concern is nothing new. Shredding paper documents remains a standard procedure for companies and consumers of all kinds. But now that most business files have moved from paper to one of many digital formats, potential security weaknesses may still be easy for criminals to exploit, but are harder for employees to control. As explained in a guide from the National Institute of Standards and Technology, even “dumpster-diving” remains a tried and true method for the illicit recovery of documents, both physical and digital.
When it comes to crime in the financial industry, the methods may be less sophisticated than one would assume.
Since the security of financial data is difficult to ensure but easy to defeat, these institutions are required by law to have stringent data control measures in place. The Securities and Exchange Commission is one of the most well-known regulatory agencies now making data security in the financial sector a priority. In April 2014, the SEC announced it would start examining financial institutions and their cybersecurity policies with even greater detail than before. This initiative included requirements that even brokers and financial advisors, who are among the largest category of professionals overseen by the SEC, would need to maintain written policies on data destruction practices.
Challenges for small firms
Larger institutions like banks usually have the resources to meet these requirements, but they could be a major concern for self-employed consultants and small firms. No matter their size, if the SEC holds authority over a financial services firm, they must meet the same data security standards. These include resource-intensive tasks like storing all network activity logs for only certain amounts of time, as well as giving equal weight to the security of any mobile devices out in the field.
In all likelihood, the strict security standards that financial institutions must meet present a real challenge to their business. But the cost of not following those standards would be even more severe. The SEC, for example, noted that firms found in noncompliance with any of these security examinations could risk penalties ranging from fines to revocation of registration, effectively putting the company out of business. Of course, the loss of client trust stemming from any security breach is enough of a threat.
Partnering with an experienced IT asset disposition firm may be among the best ways to mitigate the myriad risks associated with data security in the financial industry. Contact Sipi Asset Recovery to learn more about how to meet and exceed expectations through a comprehensive data security and destruction plan.