FSI: Cybersecurity rules can create compliance challenges

National standards would be preferable to a patchwork of state-by-state rules when it comes to dealing with rapidly evolving cyber threats - but it won’t happen!

It is no secret that cybersecurity threats are evolving far more rapidly than the ability of governments and regulators to counter them. Legislators and regulators in the states understand the urgency of this problem and have made admirable efforts to develop protections for consumers and investors.

Unfortunately, in our industry, a side effect of these individual state efforts to strengthen cybersecurity protections has been to create significant compliance challenges for advisers. What we need now is greater coordination to help these various authorities come together behind a principles-based approach to combating cyber threats.

As one illustration, all 50 states have laws requiring companies to notify consumers about data breaches, but the definitions of a “breach” and “personal information” vary by state. For firms and advisers — most of which work with clients across multiple states — this creates unnecessary complications in developing protocols to follow in the event of a breach. MORE