The Federal Reserve will increase its focus on potential secondary cybersecurity risks posed by efforts to prepare for cyber threats, Fed Vice Chairman for Supervision Randal Quarles said at an industry event yesterday.
He acknowledged the role banks play in providing services to maintain the financial system’s functionality. “But at the same time, some of the solutions in place to improve the resiliency of those critical services may actually contribute to a cyber event,” Quarles said, adding that “one example would be the replication of bad data across data centers. As the Federal Reserve thinks about its financial stability mandate, this concern will be a particular focus.”
Quarles also recapped the Fed’s efforts to “harmoniz[e]cyber risk management standards and regulatory expectations across the financial services sector,” emphasizing that the agency is aligning its expectations with industry and government best practices, such as the National Institute of Standards and Technology’s Cybersecurity Framework.
In related news, Quarles also delivered remarks on the U.S. economy and the outlook for monetary policy to a group of business economists yesterday.