Cloud computing resources are critical to modern financial firms’ IT capabilities. But while the financial services industry has established data security best practices for the cloud, financial firms face real risks and challenges while a cloud migration is underway.
“Transferring data in the cloud comes with the inherent risk of corrupting files or accidentally exposing sensitive information,” Forbes describes. “Financial companies that fail to address these security vulnerabilities put themselves at risk for costly data exposures and falling out of compliance with data security regulations.
Even firms with rigorous data security measures in place may face risks as the sensitive and unpredictable aspects of migration are underway—noncompliant behavior, vulnerabilities to human error, and others. Fortunately, there are steps IT leaders at financial firms can take to prepare and avoid data security risks as they migrate to the cloud.
In this article, we explore common data security risks financial firms face during a cloud migration. We study the causes of those risks and the potential pitfalls IT personnel face should they encounter them while their migration is underway. Finally, we provide tips on how financial firms can prepare and prevent data security incidents as they complete their transition to the cloud.
Firms Face Unpredictable Risks as They Migrate to the Cloud
As the financial services industry becomes increasingly interconnected and reliant on cloud computing resources, data security risks also increase—especially as cloud migrations are in progress. In a February 2023 report, the U.S. Department of the Treasury acknowledged that “financial service firms ramping up their reliance on cloud-based technologies need more visibility, staff support, and cybersecurity incident response engagement.”
In particular, the report highlighted vulnerabilities presented by cloud service providers (CSPs) as financial firms transition to their cloud environments. It emphasized CSPs’ responsibility to support better security, protecting their clients and the broader public as they continue to grow.
But financial firms themselves must also take steps to mitigate data security risks during their migration—on their own, and in partnership with their CSP. That’s because while CSPs can provide some inherent security capabilities, they may lack familiarity with the nuances of a given financial firm; and frankly, they may not offer sufficient security capabilities in the first place.
Internal and External Pitfalls Put Data Security in Jeopardy
During a cloud migration, financial firms face several internal risks, primarily those related to their own resources, procedures, and personnel. These risks arise from factors such as:
- Lack of a clear migration strategy: Without a well-planned and documented roadmap, the migration may be subject to human error or other missteps.
- Insufficient access controls: Financial firms may not have sufficient control of who has access to sensitive data during the migration process.
- Inadequate monitoring and verification: If not properly monitored, data can become exposed, altered, or deleted as part of the transfer process.
- Poorly trained staff: Financial firms may not have trained their employees on proper cloud computing security protocols, leaving them vulnerable to making costly errors during the migration process.
- Lack of a robust data governance framework: Poorly managed or inconsistent data governance practices can lead to data security incidents during a cloud migration.
Proper preparation and adherence to best practices can help to mitigate these risks. However, there are also external risks of which financial firms might not be entirely aware. These external factors also can pose a significant threat to data security. For example:
- Lack of visibility into third-party providers: Financial firms need to have full visibility into their CSP’s subcontractors and other third-party vendors involved in the migration process, as they could pose security risks if not properly vetted or managed.
- Data transfer and storage risks: During migration, data can be exposed to third-party systems or malicious actors if proper encryption and security protocols are not in place.
- Regulatory compliance concerns: Financial firms must adhere to strict regulatory requirements and remain compliant during their cloud migration; third parties don’t always align with these requirements.
- Advanced persistent threats (APTs): Cybercriminals may take advantage of the chaos and unpredictability of a cloud migration to launch APTs and steal sensitive data.
A well-designed cloud migration strategy should consider both internal and external risks and include plans to safeguard sensitive financial data against these potential threats.
Five Ways Firms Can Ensure a Safe Transition to the Cloud
To mitigate these risks, financial firms need to take proactive measures before and during their cloud migration. In partnership with their cloud service providers, the following techniques can help prevent security incidents, protecting critical data until the transition to the cloud is complete.
Develop a Comprehensive Migration Strategy
Your migration strategy should serve as a roadmap for a secure transition. It needs to be well-documented, detailing each step and the measures personnel must take to ensure data security. This strategy will reduce the risk of human error and other missteps that could compromise data during the migration. Firms should include their third-party partners in its creation as well.
Implement Rigorous Access Controls
Establishing strict access controls is crucial for data security. These controls should limit who can access sensitive data during the migration process. Firms should work with CSP personnel to create user access policies and procedures; these should ensure that only authorized personnel can view, transfer, or update sensitive information. These procedures should be regularly updated and reviewed to ensure only authorized personnel continue to have permission..
Enhance Monitoring and Verification Efforts
During the migration, regular monitoring and verification should be in place to track data movement, identify discrepancies, and detect potential security breaches. Automated tools can assist with this process by providing real-time alerts when changes occur or suspicious activity takes place. The right CSP will support this process by providing robust monitoring and detection capabilities.
Train Staff on Cloud Security Protocols
Educating employees about cloud security protocols can significantly reduce the risk of costly errors during the migration process. Training programs should be comprehensive, addressing the unique challenges and vulnerabilities associated with cloud migrations. Regular refresher courses can be conducted to keep staff up-to-date with the latest threats and countermeasures. CSP personnel should also be involved in these training efforts to ensure that they are familiar with the financial firm’s specific security requirements and protocols, where possible.
Establish a Robust Data Governance Framework
A robust data governance framework ensures that data is managed consistently, accurately, and securely. It should include policies and procedures for data classification, access control, data retention, and disaster recovery. Properly managing sensitive financial data according to a formal governance framework can help prevent security incidents during the migration process.
Achieve Data Security with Partners You Can Trust
The landscape of data privacy and cyber threats is constantly evolving, underscoring the importance of selecting the right cloud and technology partners for your firm. These relationships will be critical as you safeguard sensitive data during the migration and beyond. By finding the right partners, adopting these strategies, and investing in robust data privacy and security measures, you can not only ensure a secure cloud migration but also protect your data and assets in the long term.
Partner with Option One Technologies for Data Security and Recovery
At Option One, we understand the sensitivity of your data and digital assets. That’s why our comprehensive data security and recovery services are carefully designed with financial firms like yours in mind. Contact us today to learn how Option One can help with your cloud migration and other data protection needs.