Next week, New York State will begin a 45-day public comment period on its new financial industry cybersecurity regulation -- and, so far, security experts have a favorable view of the proposal.
Under the new regulations, banks and insurance companies doing business in New York State will need to establish a cybersecurity program, appoint a Chief Information Security Officer and monitor the cybersecurity policies of their business partners.
According to New York Gov. Andrew Cuomo, this is the first such regulation in the country. "This regulation helps guarantee the financial services industry upholds its obligation to protect consumers and ensure that its systems are sufficiently constructed to prevent cyber-attacks to the fullest extent possible," he said in a statement.
While the proposed regulations do offer some specifics, such as requiring annual penetration testing and multi-factor authentication for privileged users, it's not just a compliance check list -- financial firms will also need take a close look at other weaknesses that they might have.
Banks and insurance companies will be required to conduct an annual assessment of their specific risks, and design cybersecurity programs to address those risks, according to New York State Department of Financial Services superintendent Maria Vullo.
As the center of the global financial industry, New York's policies have wide-ranging effects.
Most of the foreign banks that do business in the United States have operations in New York, said Daniel Klein, COO at Tel Aviv-based security firm EverCompliant.
The proposed regulation is a big step forward for cybersecurity, he said.
"There's a big awareness right now that these are big issues, and that there are big gaps in the controls," he said.
The regulation could help pave the way for those in other countries, added Israel Levy, CEO at Tel Aviv-based Bufferzone Security.
Banks located outside New York State, whether elsewhere in the U.S. or in other countries, even if they don't do business in New York, should start preparing themselves.
"You do see financial organizations take self-imposing steps in directions to come," he said.
Meanwhile, some countries, like Israel, have even tougher regulations, he added.
For example, Israeli banks have had to have physically separate internal and external networks. The same desktop computer cannot be used to access both unless there are two separate network cards and two separate virtual machines running on the computer, so that infections that come in from the public internet can't make their way into the bank's core systems.
Another area where the New York State regulations could have gone further is in multi-factor authentication.
The new rules say that banks must "require" multi-factor for privileged users, but only "support" multi-factor for web applications that deal with sensitive information.
"Many leading banks already use multifactor authentication to secure their customers’ accounts and this protection should be universal," said John Gunn, spokesman for Oakbrook Terrace, Ill.-based VASCO Data Security.
The original plan, first floated by the previous Department of Financial Services superintendent, would have required just that. But since the change in leadership, that provision seems to have been watered down, Gunn said.
But overall, the regulations are a more in the right direction, he said.
"We really applaud the efforts, and we think it's a step in the right direction," he said.
A security check list, by itself, would not be sufficient to address the risks facing the industry.
"Regulations happen in government time, and cyber attacks happen in internet time," said Bert Rankin, chief marketing officer at Redwood City, Calif.-based security company Lastline.
Raises the bar
For the larger institutions, the requirements spelled out in the regulations might be old hat, he added.
"There are a number of banks that are extremely forward-looking and have deployed very sophisticated solutions, and there are others that have lagged behind," he said. "The types of banks that are especially vulnerable tend to be mid-tier or on the smaller end of the scale."
Given how interconnected the financial industry is, however, a weakness at any one firm could have wider repercussions.
"What this does is sets a floor, a minimum standard," he said. "There are large interdependencies between the players and the suppliers in the industry. You need to elevate everyone's security posture."
He noted, however, that the regulations are just a minimum set of requirements.
"Banks -- and enterprises in general -- need to do a lot more than just the minimum," he said.