In the past, with limited technology and basic services, credit risk was the most important concern a financial organization faced. Today, community banks take a much broader view of risk, including operational, transaction, reputation, compliance, strategic, cyber, third party and concentration risk. This multifaceted approach to risk touches every aspect of a financial organization.
Carefully assessing your risk helps you identify and understand your bank’s existing weaknesses. This creates a thorough starting point for your mitigation plan and allows you to anticipate and address threats before they develop. Overall, addressing risk management at an enterprise level creates a simpler and efficient financial organization. So, how can your community bank get there?
There are three specific principles of community bank security management that will help you better secure your organization and address risks and threats as they arise.
1. Create an Enterprise-Level Risk Management Strategy
The biggest mistake that a community bank can make in creating a risk management system is spending time on individual risks and not enough time on the enterprise as a whole.
Traditional community bank risk management identifies risks and finds ways to either leverage or mitigate those risks. This methodology is out-of-date because it’s not proactive. Banks with this methodology often end up chasing one risk after another without making any real progress. Having a reactive methodology exposes your bank to liabilities. If weaknesses in your system can’t be anticipated, you may lose money or face regulatory penalties.
Instead, addressing security at the enterprise level allows you to understand your strengths, weaknesses, threats, and weak spots. It gives you a holistic view of your bank’s systems and processes to understand where your weaknesses are – helping you pinpoint which area might be the next attack target. This strategy equips you with the foresight you need to anticipate and head-off threats before they hit.
2. Create a Culture of Risk Reduction
Everyone who works at your community bank needs to take responsibility for managing risk to some extent. Banks should educate their employees on recognizing and reporting security vulnerabilities or attacks. Once you introduce systems for identifying and communicating risk, you can encourage your people to look for possible risks themselves and inform management when they find them. This gives your employees a sense of ownership and empowers them to work with a risk management methodology in mind.
3. Work with a Trusted, Experienced Managed Service Provider
Many community banks attempt to keep operations as lean as possible to save money on overhead. However, this may mean your banking staff doesn’t have the experience, time or resources to manage your risk thoroughly.
Many banks instead opt to hire a managed service provider (MSP) to help with security and risk management. Hiring an MSP is usually very cost-effective; they can help reduce risk and secure your bank at the enterprise level at one fixed price that’s much lower than the salaries, benefits, tools, and resources they provide. MSPs can handle other IT details for you as well to allow your staff to concentrate on other tasks.
Peters & Associates
At Peters & Associates, we continue to navigate the changes brought on by industry and market conditions as well as customer preferences. We are a family-owned managed service provider that knows the ins and outs of technology and how it relates to your community bank. We hold a strong, proven bank risk assessment methodology, and we can help you create a bank risk assessment methodology that improves your institution’s cybersecurity and makes sense for your business.
Considering hiring an MSP for your community bank? Download the comparison guide, Outsourcing vs In-House: A Comparison for Community Banks.