A Federal Financial Institutions Examination Council (FFIEC) audit is an examination by the FFIEC to ensure financial institutions comply with security, risk management, and operational continuity standards.
Audits are an important part of complying with FFIEC requirements and organizations that fall short run the risk of being fined by regulators, while simultaneously losing the trust of the customers they serve.
To avoid this scenario, you need to approach the audit process in a structured, compliant way. This is not possible without a thorough, informed approach to preparations. With that in mind, here’s an overview of what it takes to get ready for an FFIEC audit efficiently and comprehensively.
FFIEC compliance centers on effective risk management and the resilience of operational systems. Finance entities are expected to keep sensitive information safe, check that critical systems are robust enough to avoid outages, and guarantee that customers will not suffer if disaster strikes.
The main FFIEC compliance requirements include:
The process of highlighting risks, implementing controls to mitigate them, monitoring the effectiveness of controls, and keeping risk management policies up to date must be formalized as part of an information protection program.
Once threats to operational resilience have been identified, they must be thoroughly scrutinized so that organizations know which specific systems are most vulnerable, how these vulnerabilities might be exploited, and what the fallout of breaches and disruption might be.
Regarding the protection of customer data, appropriate policies to deliver on privacy promises are a necessary part of FFIEC compliance, particularly in light of regulations like the GLBA and other emergent pieces of legislation including the CCPA.
Incidents are impossible to rule out entirely, and so the FFIEC expects finance entities to plan how they will respond to breaches and other forms of digital disruption when they occur. These plans must cover everything from identifying issues and keeping the damage contained to notifying stakeholders and bringing critical systems back online swiftly following an outage.
The FFIEC’s focus goes beyond incident response planning for digital disruptions. Compliance also involves managing business continuity efforts in other contexts, such as when natural disasters knock out certain critical services or compromise on-premises access.
Vendor risk management is increasingly important for FFIEC compliance since regulators recognize the growing role of third-party service providers in everyday operations throughout the finance sector. Companies must not only keep track of their own compliance efforts but also assess external vendors and hold them to the same standards.
It is not enough to claim that your operations are compliant with FFIEC requirements. This must be definitively proven through consistent logging practices that create clear audit trails which can be followed when regulators get involved. This creates accountability and clarity, as well as pinpointing how systems are accessed and where changes are made for total operational transparency at every level of the organization.
Using a software escrow service is one sensible strategy for creating audit trails and satisfying other aspects of FFIEC compliance, especially for finance entities that are increasingly reliant on the likes of SaaS tools to serve customers.
Gearing up for an FFIEC audit is not something that can be left until the last minute. A regimented approach delivers the best results. To do this:
Understand the FFIEC’s guidelines as they apply to the operations of your organization. This will give you a clear indication of the scope of compliance and the particular requirements you will need to meet, since these differ depending on the services you offer and the size of your operations, amongst other variables.
Carry out a gap analysis to create an unambiguous overview of how your current practices stack up against FFIEC standards. This helps identify any gaps that need addressing before you move forward, making your remediation efforts focused, not guesswork.
Review existing policies and determine if they are compliant with industry regulations, or if they need to be updated to achieve this status. Most importantly these policies must align with the practices and processes your organization follows day to day, not those that it aspires to deliver on but cannot currently reach.
Conduct risk assessments to single out and assess issues facing you from the standpoint of operational continuity, and exposure to third-party vendor compliance shortcomings as well. In doing so, create comprehensive documentation of risk assessment findings so that auditors have the evidence they need when they ask for it down the line.
Investigate current incident response plans and establish whether they are up to date and appropriately robust, or whether they need to be refreshed so that they can legitimately be useful when implemented to provide continuity when breaches occur or other types of disruption hit home.
Optimize and reinforce the importance of clear, consistent record-keeping to cover everything from risk management processes and testing procedures to gap analysis findings and determined responses. Documenting everything you have done to push your organization closer to its compliance goals is a necessity if you want to satisfy auditors.
Complying with FFIEC guidelines and preparing for an FFIEC audit is necessary for any financial entity with US operations and also applies to vendors that serve organizations in this sector.
Any company facing this prospect should use a software escrow service to mitigate common risks and provide unbroken access to mission-critical assets, as well as create comprehensive audit trails that align with recommended logging procedures.
There is no excuse for non-compliance, and the specialized, tailored escrow solutions from Escode bring you closer to this goal with ease.
