Cybersecurity Still Top FINRA Operational Risk

On January 4, the Financial Industry Regulatory Authority (FINRA) published its annual Regulatory and Examination Priorities Letter providing firms with information about areas FINRA plans to review in 2017 as well as observations resulting from examinations and other industry interactions. As the letter reflects, cybersecurity threats continue to be one of the most significant operational risks faced by firms.

While FINRA acknowledges that there is no one-size-fits-all approach to cybersecurity, its 2017 letter reinforces its commitment to advising an approach grounded in risk management and effective control mechanisms for maintaining firms' security and integrity. Among the areas of focus are firms' methods for preventing data loss and controls to monitor and protect data. Specifically, the letter emphasizes two shortcomings in the area of controls. The first is cybersecurity controls at branch offices, such as independent contractor branch offices, which FINRA