Boston Fed President Comments on the Ever-Changing Nature of Cyber Risk

Privacy/Cyber Risk & Data Security Federal Reserve Fintech

On April 4, the Federal Reserve Bank of Boston’s President Eric S. Rosengren delivered remarks at the 2016 Cybersecurity Conference. Rosengren commented on the status of the U.S. economy and the “ever-changing” nature of cyber risk. According to Rosengren, risks in the cyber realm, unlike those related to the economy, are not waning. Significant cyber risk points outlined in Rosengren’s remarks include: (i) banks are increasingly having to compete with “fintech” entities providing similar financial services without the regulatory burden of being a bank; (ii) rapid growth in new applications and devices may provide consumer convenience, but do not always focus on security issues at large; and (iii) implementation of a communication plan addressing customer, vendor, and regulator concern in light of a breach is critical to mitigating problems. Finally, Rosengren cautioned that, “[b]anking organizations need to continue to evolve as [cyber risks] morph, and as new innovations and expectations of convenience introduce new challenges to security.”