As the frequency and level of disruption of operational disruptions and cyberthreats increase, so too have concerns around data security. Over the past year, major security incidents like the AWS outage and Capita breach have prompted firms to reconsider their risk management practices, and how effective security frameworks– or lack thereof – can impact business operations.
Security serves multiple purposes for firms, not only protecting systems, users, and data, but also meeting operational resilience requirements set out by regulators. But while sound security has been traditionally seen as a “cost of doing business,” firms are increasingly discovering that proactive security frameworks can not only keep operations safe, but give them a competitive edge.
Reduced risk, increased confidence
Lapses in security can lead to lost or compromised data, which can be detrimental to a firm’s reputation. Especially in the financial services industry, where firms and trusted third-party providers handle sensitive information and personal financial details coveted by cybercriminals, there is an added pressure to build robust and layered defenses that can shield against a variety of complex cyberattacks.
Simply having a risk management framework isn’t enough – firms must have a clear outline of steps they are taking to ensure the effectiveness of their controls. This means establishing rigorous procedures, such as regular risk assessments, encryption measures, and audit reports.
Firms must also ensure that they have complete, ready access to the security documentation of any third-party service providers. Regardless of whether a disruption happened on an internal system or not, firms are ultimately responsible for security issues or breaches that impact them, so conducting due diligence (and ensuring their third-party partners do the same) is vital.
Having clear, reliable security frameworks in place not only increases confidence of teams within a business, but also with regulators, who can see the steps that firm has taken to meet requirements, markets, investors, and the wider public.
How can good security practices support compliance?
Security and compliance go hand in hand. “Investor protection” is a key focus for financial regulators, highlighted in guidelines like the Securities and Exchange Commission’s (SEC) Regulation S-P and the European Union’s General Data Protection Regulation Act. By failing to properly protect clients and their information, firms are in violation of guidelines like these, which could lead to regulatory scrutiny and potential enforcement outcomes.
Cybersecurity and operational resilience have become key concentrations within the financial space. The SEC’s Examination Priorities for 2026 highlighted these themes as “perennial” issues impacting market participants, advising firms to remain committed to good data governance practices, data loss prevention measures, and access controls.
As the compliance landscape rapidly evolves, Artificial Intelligence (AI) is becoming an invaluable tool to perform enhanced risk detection and automate review processes, which helps reviewers get to the root of issues quicker by reducing time-sapping false positives. Although, as with any emerging technology, firms must be aware of how to balance AI’s potential risks to cybersecurity while maximizing the benefits.
Setting the stage for success
Pre-emptive investment in risk management can help firms avoid major crises down the line. Fortinet reported that 65% of financial organizations globally experienced some level of ransomware attack in 2024 – a substantial rise from 34% in 2021.
With operational disruption becoming an all-too-common occurrence, firms that reassess their security systems can avoid expenses associated with incident response and recovery, as well as mitigate negative impacts to reputation.
A key aspect of ensuring long-term operational resilience is implementing clear policies and procedures that outline how personnel can develop a security-first mindset. By offering training on security best practices, performing stress tests to gauge responses, and consistently keeping open lines of communication that encourage staff to proactively report potential issues, firms can increase security awareness and better prepare staff to recognize – and report – hazards.
Equally as important is enlisting the support of a technology vendor that can demonstrate their commitment to security through comprehensive documentation and transparency around processes, such as conducting due diligence. Beyond adherence to global security standards such as ISO 27001, vendors with robust practices to certify and protect data integrity can support your firm’s security efforts and provide peace of mind.
Global Relay takes a 360 approach to security – from private, SOC-audited data centers to military grade encryption defenses to around-the clock monitoring, your data will remain protected from the moment it enters our systems.
