Project #1: Cybersecurity Strategy And Plan Of Action ✓ Solved

Project #1: Cybersecurity Strategy & Plan of Action

Your Task: You have been assigned to support the Padgett-Beale Merger & Acquisition (M&A) team working under the direct supervision of Padgett-Beale’s Chief Information Security Officer (CISO).

The M&A team is in the planning stages for how it will integrate a new acquisition, Island Banking Services, into the company as its financial services arm (PBI-FS). Initially, PBI-FS will function as a wholly owned subsidiary which means that it must have its own separate cybersecurity program. Your first major task (Project #1) will be to help develop a Cybersecurity Strategy & Plan of Action for PBI-FS. Island Banking Services never had a formal cybersecurity program so you’re starting from scratch. You will need to research best practices as well as relying heavily upon what you learned in your undergraduate studies in Cybersecurity Management and Policy.

The CISO has provided detailed instructions for this task. Background: After five years of operation, Island Banking Services -- a non-U.S. firm -- was forced into bankruptcy after criminal money laundering charges were filed against the company and its officers. Padgett-Beale, Inc. purchased the digital assets and records of this financial services firm from the bankruptcy courts. The purchased assets include licenses for office productivity software, financial transactions processing software, database software, and operating systems for workstations and servers. Additional assets included in the sale include the hardware, software, and licensing required to operate the company’s internal computer networks.

Padgett-Beale’s legal counsel successfully negotiated with the bankruptcy court and the criminal courts for the return of copies of the company’s records so that it could restart Island Banking Service’s operations. The courts agreed to do so after Padgett-Beale committed in writing to reopening the customer service call center (but not the branch offices) on the island. Reopening the call center will provide continued employment for 10 island residents including 2 call center supervisors.

Padgett-Beale intends to relocate the call center to a company owned property approximately 10 miles away from the current location and adjacent to a newly opened Padgett-Beale resort. Padgett-Beale’s Risk Manager has recommended that the Merger & Acquisition plan be amended such that Island Banking Services would be operated as a wholly owned subsidiary for a period of 5 years rather than being immediately and fully integrated as an operating element of Padgett-Beale.

The company’s attorneys agreed that this would be the best approach given the potential for additional legal troubles related to the actions of the previous owners and employees. The Board of Directors has signed off on this amendment to the M&A plan and stipulated that the new subsidiary will be named PBI Financial Services (PBI-FS).

The company officers and senior managers for PBI-FS will be named at a later date. For now, the leader of the M&A Team will serve as the Chief Operating Officer. Padgett-Beale’s Chief Information Security Officer will be loaned to PBI-FS while a search is conducted for a dedicated CISO for the subsidiary. CISO’s Detailed Instructions to You:

1. Read and Analyze the Background Materials: If you have not already done so, read the Background information in this file. Next, review the Padgett-Beale M&A Profile 2020 which was posted to the LEO classroom. You should also review all materials from the classroom for Weeks 1 – 4 as these provide needed information about the Financial Services industry and the legal and regulatory requirements which apply to this industry.

2. Perform a Gap Analysis & Construct a Risk Register: Using the information available to you, determine the most likely information technology/security gaps which existed at Island Banking Services prior to its being acquired by PBI. Next, determine which of these, if not addressed, will likely exist in the newly formed subsidiary PBI-FS. Document your analysis and evaluation in a Gap Analysis.

Your Gap Analysis should address operating issues relating to confidentiality, integrity, and availability (CIA) of information, information systems, and information infrastructures owned or used by PBI-FS. Your analysis should also consider and use the People, Process, and Technology framework. Step 1: Identify 10 or more significant cybersecurity issues/challenges/risks which the background information and M&A profile indicate currently exist at PBI-FS / Island Banking Services. You are allowed to “read between the lines” but must be able to map your analysis and findings to specific statements from these documents. These items will become your “Gaps” for the Gap Analysis.

3. Create a Risk Register: Using your Gap Analysis (step 1) create a Risk Register in which you list 10 or more specific and separate risks. For each risk, assign a category (confidentiality, integrity, availability, people, process, technology) and a severity (impact level using a 1 – 5 scale with 5 being the highest potential impact).

4. Review the laws and regulatory guidance which apply to the Financial Services industry: For each entry in your risk register, identify and record the laws, regulations, or standards which provide guidance as to how the identified risks must be addressed or mitigated.

5. Review laws and regulations which apply to all companies: Review your Risk Register and either map these requirements to existing entries in your risk register or insert new entries for significant legal or regulatory requirements which you were not able to map to your previously identified risks.

6. Develop a Cybersecurity Strategy: Present five or more specific actions (strategies) that the company should take to implement your recommended risk mitigations. Include information from your gap analysis, legal and regulatory analysis, risk analysis, and proposed risk mitigations.

7. Develop a plan of action and implementation timeline: Address each element of the cybersecurity strategy that you identified previously. Provide time, effort, and cost estimates for implementing your recommended actions.

8. Develop a high-level summary of recommendations: These recommendations should logically flow from your analysis and be supported by your Cybersecurity Strategy and Plan of Action.

Formatting: Your work must include an introduction, gap analysis, legal & regulatory analysis, risk analysis & risk register, cybersecurity strategy, plan of action, and a references list. It should also include a cover letter/memo summarizing the document's purpose and contents.

Paper For Above Instructions

In the evolving landscape of cybersecurity, the recent acquisition of Island Banking Services (IBS) by Padgett-Beale (PBI) presents a critical opportunity to establish and implement a robust cybersecurity strategy. This paper outlines a comprehensive Cybersecurity Strategy and Plan of Action necessary for the successful integration of IBS as PBI Financial Services (PBI-FS), ensuring compliance with pertinent regulations and safeguarding sensitive data.

Introduction

This document serves as the Cybersecurity Strategy and Plan of Action for PBI-FS, detailing the essential security measures and frameworks to protect assets and establish a formal cybersecurity program. Given that Island Banking Services lacked a formal cybersecurity framework prior to acquisition, this plan will address existing vulnerabilities while aligning with industry standards and best practices.

Gap Analysis

Prior to acquisition, Island Banking Services exhibited a myriad of cybersecurity gaps, leading to its financial downfall. Key identified gaps include:

• Inadequate employee training on security protocols.
• Weak data encryption practices.
• Lack of incident response strategies.
• Poor access controls for sensitive information.
• Insufficient monitoring of network traffic.
• Vulnerability to phishing attacks.
• No formal risk management processes.
• Lack of privacy policies.
• Insecure software vendor management.

To effectively tackle these vulnerabilities, a structured approach will be taken based on the People, Process, and Technology framework, focusing on enhancing confidentiality, integrity, and availability (CIA) principles.

Legal & Regulatory Requirements Analysis

The financial services industry is subject to various regulatory frameworks that mandate strict cybersecurity compliance. Applicable laws include:

• Gramm-Leach-Bliley Act (GLBA): Governs data protection and privacy.
• Payment Card Industry Data Security Standard (PCI DSS): Stipulates standards for processing credit card information.
• Sarbanes-Oxley Act (SOX): Establishes stringent requirements for financial records.
• Federal Financial Institutions Examination Council (FFIEC) guidelines: Provide standards for cybersecurity risk management.

Compliance with these regulations is paramount for mitigating legal exposure and ensuring operational integrity in the financial sector.

Risk Analysis & Risk Register

A comprehensive risk register has been compiled categorizing identified risks in terms of severity and applicable regulatory frameworks. Notable entries include:

This risk register aids in prioritizing risks and establishing a structured approach for risk mitigation.

Cybersecurity Strategy

The Cybersecurity Strategy for PBI-FS will focus on five core actions:

1. Implement Advanced Threat Detection Systems: Deploy intrusion detection systems (IDS) and threat intelligence capabilities to monitor network traffic actively.
2. Enhance Employee Training Programs: Regular cybersecurity awareness training sessions for all employees to identify potential threats, including phishing and social engineering attacks.
3. Establish Strong Access Controls: Utilize multi-factor authentication (MFA) for all systems housing sensitive information to prevent unauthorized access.
4. Develop a Comprehensive Incident Response Plan: Create and test an incident response plan to effectively address data breaches or system compromises.
5. Update Infrastructure with Suitable Security Technologies: Revamp the network infrastructure to incorporate firewalls, VPNs, and updated antivirus solutions.

Plan of Action and Implementation Timeline

The implementation timeline for the cybersecurity strategy is essential for adherence to designated years for successful integration and risk mitigation. Key actions include:

• Month 1-2: Conduct a thorough assessment of existing infrastructure and initiate employee training.
• Month 3-4: Deploy IDS and develop incident response protocols.
• Month 5-6: Introduce MFA and complete infrastructure updates.

High-Level Summary of Recommendations

To effectively mitigate risks associated with the acquisition of Island Banking Services and establish a formalized cybersecurity program at PBI-FS, the following recommendations should be undertaken:

• Secure executive buy-in for cybersecurity initiatives and funding.
• Establish a dedicated cybersecurity team to oversee implementation and enforcement of policies.
• Regularly review and update cybersecurity strategies in alignment with evolving threats.
• Engage in continuous employee education and awareness initiatives.
• Invest in advanced technologies for threat detection and incident response.

Conclusion

Establishing a solid cybersecurity framework for PBI-FS is essential in promoting resilience against evolving threats in the financial services industry. By addressing the gap analysis findings and employing robust strategies, PBI-FS can pave the way for secure operations and instill customer confidence in the new subsidiary.

References

• Federal Financial Institutions Examination Council. (2020). Cybersecurity Assessment Tool.
• Gramm-Leach-Bliley Act, 15 U.S.C. § 6801-6809 (1999).
• Payment Card Industry Security Standards Council. (2021). PCI DSS Standards.
• Sarbanes-Oxley Act of 2002, 116 Stat. 745.
• National Institute of Standards and Technology. (2018). NIST Cybersecurity Framework.
• CISA. (2022). Building a Cybersecurity Program for Your Business.
• Gartner, Inc. (2021). Market Guide for Security Awareness Computer-Based Training.
• ISACA. (2020). Cybersecurity Awareness and Training.
• McKinsey & Company. (2019). The Fight Against Cybercrime.
• IBM. (2021). Cost of a Data Breach Report 2021.