Banks face the challenge of integrating cybersecurity into their broader governance and risk management frameworks. As Rich Friedberg, CISO at Live Oak Bank, emphasizes in an insightful interview with Help Net Security, treating cybersecurity solely as a technical or compliance issue is a common mistake that hampers effective risk management. Instead, banks must view cybersecurity as a strategic business risk that is embedded across enterprise-wide decision-making processes.
The Common Pitfalls in Bank Cybersecurity and Governance Alignment
Many banks struggle to connect cybersecurity with broader enterprise risk management because they see cyber primarily as a technical or compliance function. This disconnect often results from leadership viewing cybersecurity in isolation, which limits its influence on strategic decisions. Moreover, when cybersecurity teams are positioned lower in the organizational hierarchy—reporting into technology or engineering—they lack visibility and authority in critical governance forums.
Without integrated governance processes, risks are often identified too late, mitigation strategies are delayed, and opportunities for proactive risk management are missed. To address these issues, banks need to elevate cybersecurity to a strategic level, embedding it into enterprise-wide decision-making and risk frameworks.
Embedding Cybersecurity into Enterprise-Wide Decision-Making
Effective cyber governance begins with positioning cybersecurity as both a business enabler and a core component of enterprise risk. When security leaders are included early in product development, mergers and acquisitions, and strategic initiatives, they can influence risk assessments and decision-making processes.
For example, during product launches, cybersecurity teams should evaluate risks in business terms—such as potential reputational damage or regulatory penalties—rather than just technical vulnerabilities. This proactive approach helps align security with business objectives, fostering collaboration rather than confrontation.
Leaders must also ensure that cybersecurity is integrated into enterprise risk management (ERM) frameworks. This integration enables a holistic view of organizational risks, empowering decision-makers to balance innovation, growth, and security effectively.
Measuring the Effectiveness of Cyber Governance: KPIs and Metrics
Many organizations fall into the trap of focusing on technical controls—like patching rates or intrusion detection alerts—rather than evaluating governance effectiveness. To truly assess how well cyber governance aligns with enterprise risk, banks should develop KPIs that reflect strategic goals.
Some valuable metrics include:
- Percentage of strategic initiatives with cybersecurity embedded from inception.
- Time to identify and remediate risks during new project development.
- Number and aging of policy exceptions or deviations.
- Instances where cyber risks block or delay business initiatives.
- Frequency of cybersecurity risk discussions in executive or board meetings.
These metrics incentivize early risk detection, cross-functional collaboration, and continuous improvement, ultimately fostering a culture where cybersecurity is a shared responsibility.
Clarifying Roles and Responsibilities Across Leadership
Clear accountability is crucial to effective cyber governance. Yet, many banks face challenges with overlapping responsibilities among the CISO, CIO, CRO, and CCO. As Rich Friedberg explains, the key is fostering strong collaboration through a well-structured ERM program.
When launching new initiatives, these leaders should work together to identify potential risks and assign ownership explicitly. For example, the CISO might handle data security, the CRO oversee operational risks, and the CCO manage compliance-related issues. In gray areas, shared accountability is essential, but each risk must have a designated owner to prevent gaps.
A culture of role clarity, combined with open communication, helps ensure that risks are managed proactively, and no critical aspect is overlooked.
Staying Ahead of Regulatory Changes
With regulations like DORA in Europe and increased oversight from the OCC and FFIEC in the U.S., banks must treat regulatory updates as strategic initiatives rather than mere compliance checklists. Establishing a dedicated regulatory management function ensures they track and analyze emerging requirements continuously.
Integrate these updates into existing ERM and governance frameworks, involving cybersecurity, legal, operations, and third-party risk management teams. Additionally, vendors and third-party providers must be monitored to ensure they meet evolving regulatory standards.
Proactive engagement and cross-functional collaboration are the keys to maintaining compliance and reducing operational risk, especially as regulators scrutinize third-party relationships and data security practices.
