By unifying vendor continuity (VCM) and business continuity management (BCM) principles and practices, banks and financial services institutions can capitalize on economies of scope and manage risk more holistically to achieve cyber resilience.
The volume and frequency of cyber breaches that occur via third-party vendors is alarming, leading to millions of records containing privacy data for customers, consumers and employees being stolen all too frequently.
While financial services organizations are maturing in their approach to risk management, there are still significant gaps across silos of risk practices. In December 2018, the Basel Committee on Banking Supervision (BCBS) published Cyber-resilience: Range of Practices, which compares bank cyber-resilience practices across regulatory jurisdictions around the world.
A key section of the report, “Interconnections with Third Parties,” found that banks across different jurisdictions require institutions to develop management- and/or board-approved outsourcing framework for managing risk. The findings in this section support a strong business case for banks to integrate their vendor risk management (VRM) and business continuity management (BCM) programs to better manage dependencies and achieve economies of scale.
In an increasingly complex business ecosystem, critical activities depend on vendors, with regulations stressing the importance of aligning business continuity plans of critical vendors (and their subcontractors) with the needs and policies of financial services organizations, in terms of recovery, stability and security. These regulations drive improved resiliency through a detailed assessment of a vendor’s risk and recovery programs.
This paper is a road map to integrate VRM and BCM disciplines by aligning technological advances and best practices with evolving risk appetites and tolerances. Financial services organizations must strive to close the gap between cybersecurity, vendor risk management, and business continuity to reduce risk to their customers and business and to improve their overall operational resilience.