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Cyber Concerns Rise as Boards Address Oversight Challenge

Annual Risk Survey Also Examines Regtech Use, Stress Testing and More

BRENTWOOD, TENN., March 26, 2019 – Bank leaders are more worried than ever about cybersecurity: Eighty-three percent of chief risk officers, chief executives, independent directors and other senior executives of U.S. banks responding to Bank Director’s 2019 Risk Survey, sponsored by Moss Adams, say their concerns about cybersecurity have increased over the past year.

Executives and directors have listed cybersecurity as their top risk concern in five prior iterations of Bank Director’s annual survey, which reveals the views of 180 bank leaders, representing banks ranging from $250 million to $50 billion in assets, about today’s risk landscape, including cybersecurity oversight, risk governance, the impact of regulatory relief on risk practices, the potential effect of rising interest rates and the use of technology to enhance compliance.

Finding that these leaders are more—rather than less—worried about cybersecurity could be indicative of the industry’s struggles to wrap their hands around the issue.

The majority of bank boards tend to oversee cybersecurity within a committee rather than as a full board, but exactly which committee is focused on the task is a mixed bag. Twenty-seven percent of respondents say their board addresses cybersecurity within the risk committee, 25 percent within the technology committee and 19 percent within the audit committee.

Board-level cybersecurity committees remain rare: Just 8 percent report their board has one. And roughly one-third indicate one director is a cybersecurity expert, suggesting a skill gap some boards may seek to address.

The survey also finds that more banks are hiring chief information security officers. Thirty percent indicate the CISO focuses exclusively on cybersecurity—a practice more common at banks above $10 billion in assets. Almost half say their bank’s CISO holds additional responsibilities within the organization.

The 2019 Risk Survey was conducted in January 2019. Additional findings include:

  • Rising concerns around interest rate risk: Fifty-eight percent expect to lose deposits if the Federal Reserve raises interest rates by more than one hundred basis points (1 percentage point) over the next 18 months. Thirty-one percent lost deposit share in 2018 as a result of rate competition.
  • Stress testing yields benefits: Sixty percent of respondents from banks between $10 billion and $50 billion in assets reveal they are keeping Dodd-Frank Act (DFAST) stress test practices in place, despite passage of the regulatory relief package last year. The Economic Growth, Regulatory Relief and Consumer Protection Act freed banks from this requirement.
  • More than three-quarters of those surveyed from banks below $10 billion say their bank conducts an annual stress test.
  • Following a statement issued by federal regulators late last year, 71 percent indicate they have implemented or plan to implement more innovative technology in 2019 to better comply with Bank Secrecy Act/anti-money laundering (BSA/AML) rules. Another 10 percent will work toward implementation in 2020.
  • Despite buzz around artificial intelligence, 63 percent indicate their bank hasn’t explored using AI technology to better comply with the myriad rules and regulations banks face.

Full survey results are available online at BankDirector.com and will be featured in the 2nd quarter 2019 issue of Bank Director magazine.

ABOUT BANK DIRECTOR
Since 1991, Bank Director has served as a leading information resource for the directors and officers of financial institutions. Through Bank Director magazine, its executive-level research, annual conferences and website, BankDirector.com, Bank Director reaches the leaders of the institutions that comprise America’s banking industry. Bank Director is headquartered in Brentwood, Tennessee.

ABOUT MOSS ADAMS
With more than 2,900 professionals across 25-plus locations in the West and beyond, Moss Adams provides the world's most innovative companies, including over 400 financial institutions, with specialized accounting, tax, and consulting services to help them embrace emerging opportunity. Discover how Moss Adams is bringing more West to business. For more information visit www.mossadams.com/fi.

Source: BankDirector.com

Contact: Michelle King, chief marketing officer, (615) 777-8465, mking@bankdirector.com