The New York State Department of Financial Services (DFS) published a new cybersecurity regulation for firms operating in the financial sector. The proposal could have serious ramifications for IT decision-makers and their peers.

Financial Services Superintendent Maria T. Vullo revealed the updated plan at the end of 2016. The updated proposal spans 14 pages and includes a range of modifications from the initial plan released last September.

This cybersecurity regulation covers a series of best practices, from annual certification to executive sponsorship. The regulation highlights the importance of paying attention to governance concerns, particularly with regard to information security leadership.

New Responsibilities for IT Leadership

The original plan set a deadline of Jan. 1, 2017, for compliance with the new DFS cybersecurity regulation. Banks, insurance companies and other finance firms will now have until March 1 to meet the requirements of the proposal.

As part of the proposal, finance firms must create annual reports that cover material cybersecurity events. These documents must be accepted by the board and appropriate certification forwarded to DFS.

Cybersecurity leadership forms another key tenet of the regulation. Finance firms would need to employ a chief information security officer (CISO) to comply with DFS requirements.

An Adjustment Period

The newly proposed regulation provides financial institutions with more flexibility than the original plan. The adjustments were made after a period of consultation. An additional 30-day comment period will run before the new proposals are enacted in March.

Under the new proposals, firms have 72 hours to report a breach from the time it is discovered. In the original plan, firms had to report within 72 hours of the breach itself.

The original regulation also cited a six-year retention period for data. After consultation, the agency determined that the collection of data could create a bigger potential target for cybercriminals and reduced the retention period to five years.

Cybersecurity Regulation Presents New Challenges

Some influencers believe organizations already face too many compliance requirements. SecurityWeek reported that some experts believe regulations actually take IT specialists away from front-line defense work. Additionally, firms will likely struggle to appoint CISOs per the DFS requirement, as the role of the CISO remains poorly defined.

This anomaly exists because few businesses treat security as an individual line item. Employees with little security expertise too often undertake processes critical to cyberdefense. As a result, many CISOs lack insight into security investments across the enterprise.