Maintaining the security of client data and financial information is paramount for any registered investment advisory (RIA) firm. As cybersecurity threats continue to loom large, RIAs and financial advisors like you must take the necessary measures to protect yourselves and your clients from potential risks. A comprehensive security policy is a critical element of this effort and one that should not be overlooked.
In the following sections, we will explore in greater detail the importance of creating and implementing a security policy for your RIA or financial advisory firm. We will delve into its role in protecting against internal and external threats and discuss its key components. We will also provide an overview of various general information security policy templates that can guide you in creating your own security policy.
What is a security policy?
Information security and cybersecurity are two closely related terms that encompass a variety of different measures taken to protect data, systems, and networks. Information security is a broader concept that involves the protection of all types of information, whether in digital or physical form, and includes measures to ensure the confidentiality, integrity, and availability of that information. Information security covers a wide range of areas beyond just technology, such as physical security, personnel security, risk management, and compliance.
On the other hand, cybersecurity specifically focuses on securing digital information and systems and protecting them against cyberthreats. This entails preventing unauthorized access, attacks, and damage to computer networks, devices, and electronic data. As such, cybersecurity comprises technologies, practices, and processes aimed at preventing, detecting, and responding to cyber incidents, including malicious activities such as hacking, malware, phishing, and data breaches.
With these definitions in mind, a security policy is essentially a set of written rules and procedures that guide an organization’s overall security practices. It is an overarching document that outlines the security goals, objectives, and measures of an organization and serves as a road map for managing both information security and cybersecurity.
Why is a security policy important?
The need to protect client data and financial information has become increasingly pressing in recent years, given the rising number of cyberattacks targeting businesses across all industries. A security policy serves as a critical line of defense in this landscape. It provides your RIA or financial advisory firm with the guidance and framework necessary to protect against malicious actors, defend against data breaches, and ensure compliance with applicable regulations.
For instance, research indicates that a significant percentage of cyber incidents stem from inadvertent actions by employees, such as falling victim to phishing attempts or improper handling of sensitive information. By implementing a comprehensive security policy and providing regular employee training on best practices, your RIA or financial advisory firm can minimize the likelihood of such incidents.
A security policy helps your RIA firm demonstrate to regulators that you have a systematic approach to information security and are taking proactive steps to protect client data. It serves as a documented proof of your commitment to compliance, which can be crucial during regulatory audits or examinations.
How do you create a security policy?
Developing an effective security policy may initially appear daunting, but breaking it down into manageable steps can simplify the process. When crafting a security policy for your RIA, consider the following key questions:
Who does what, when, and why?
- Clearly define the roles and responsibilities of your employees when it comes to protecting data and systems.
- Outline expectations for day-to-day operations as well as specific policies and procedures to follow in the event of a security incident.
For example, you may specify that all employees should use complex passwords and multifactor authentication when accessing systems. You may also stipulate that any suspicious activity or attempted breaches must be reported to the IT department immediately.
Who gets access to what?
- Establish a clear framework for user access and define which employees have permission to access specific resources.
- Define the conditions under which access is granted or revoked, such as when an employee leaves or transfers to a new role.
Doing such will help you ensure that only authorized personnel are accessing sensitive data and prevent malicious actors from utilizing stolen login credentials. Likewise, regularly reviewing access will help you maintain proper data security throughout any changes in personnel.
What are the compliance requirements?
- Consider the specific compliance standards and regulations that apply to your RIA or financial advisory firm, such as those set forth by the SEC and FINRA.
- Outline these requirements in your security policy and ensure that all employees are aware of the industry-specific regulations and protocols they must adhere to.
Additionally, ensure that your security policy is regularly updated to reflect any new regulation changes or updates to industry standards. This will help you maintain an appropriate level of security and stay compliant with applicable laws and regulations.
What is the penalty for noncompliance?
Set forth the disciplinary measures that will be taken in the event of noncompliance with your security policies. This could include verbal or written warnings, suspensions, or even termination in the case of serious violations.
When you clearly outline the consequences of not complying with security protocols, it helps employees grasp the importance of following these measures. Not only does this ensure their understanding, but it also acts as a strong deterrent against any potential malicious activities. This also eliminates any ambiguity regarding the standards of conduct expected of your staff and advisors, thus reducing the likelihood of any missteps.
General information security policy templates
To streamline the process of developing a robust security policy, RIA WorkSpace offers a wide range of general information security policy templates specifically tailored to the needs of RIAs and financial advisors. The following templates cover essential aspects of security management, providing a solid foundation for implementing comprehensive security measures.
If you’d like a copy of these templates, please contact us.
Acceptable encryption policy
The purpose of this policy is to restrict encryption use to well-established algorithms that have undergone thorough public review and demonstrated their effectiveness. It also gives direction on complying with federal regulations and obtaining legal permission when disseminating and using encryption technologies outside the United States.
Acceptable use policy
This policy outlines the acceptable use of organizational resources and systems, including networks, equipment, computers, devices, and applications. It details the rules employees must follow when using company resources for personal activities as well as offers guidance on handling confidential material and any potential security concerns.
Clean desk policy
This policy sets standards for keeping workspaces free of sensitive or important information about employees, customers, vendors, and intellectual property. It requires that sensitive documents be locked away when not in use and provides guidelines for storing confidential materials securely. Not only is having a clean desk policy compliant with ISO 27001/17799, but it is also a basic measure for ensuring privacy.
Data breach response policy
This policy defines the goals and procedures for responding to data breaches. It clearly states who is in charge of executing the data breach response, and includes a definition of what constitutes a breach, staff roles and responsibilities, standards, metrics for prioritizing incidents, and reporting, remediation, and feedback mechanisms.
Disaster recovery plan policy
This policy establishes the organization’s approach to responding to disasters that could threaten business continuity. It outlines the roles, responsibilities, and procedures for restoring systems and data in the event of a disaster as well as definitions, protocols, and expectations for responding to such an emergency.
Digital signature acceptance policy
This policy provides guidance on when digital signatures can be used to validate the identity of a signer in electronic documents and communication in place of traditional signatures. It aims to avoid ambiguity regarding the trustworthiness of a digital signature due to the prevalence of electronic communications.
Email policy
This policy outlines expectations for using email systems, such as standards for acceptable content and language, company-wide guidelines on employee usage, and protocols for protecting confidential information sent via email.
End user encryption key protection policy
This policy sets forth the rules and procedures for protecting encryption keys used to encrypt and decrypt data on organizational systems. It covers topics such as key generation, storage, backup, archiving, and destruction, which are critical to ensuring the security and integrity of sensitive information.
Ethics policy
This policy defines standards of behavior expected from employees and any other individuals associated with the organization, such as contractors, vendors, and consultants. It outlines expectations regarding confidentiality, conflicts of interest, and acceptable behavior in the workplace and ensures that everyone is aware of the company’s commitment to ethical practices.
Pandemic response plan policy
This policy outlines protocols for responding to pandemics and other public health emergencies. It addresses personnel responsibilities, safety measures, communication strategies, and operational continuity plans. This is in addition to the regular disaster recovery plans that should be in place for a range of disaster scenarios.
Password construction guidelines
This policy provides best practices for creating strong passwords that are difficult to guess and crack. It sets minimum standards for password length and complexity as well as guidelines for password rotation, storage, and usage.
Security response plan policy
This policy defines the procedures for responding to security incidents, including breach detection, containment/remediation, and investigation. It also includes instructions on how to handle threats, such as malware and phishing attacks. Implementing this policy enables swift response to security incidents, effectively preventing them from escalating into major crises.
By establishing and adhering to these security policies, you can effectively manage the security of your RIA firm and create a safe and reliable environment for your employees, clients, and other stakeholders.
Contact us at RIA WorkSpace to discuss how we can help you develop a comprehensive security program.