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Why Financial Institutions Need Penetration Testing in 2022

As we move into 2022, financial institutions are preparing themselves for a host of new regulations and compliance standards. Penetration testing is a great way to reach these new standards. Penetration testing is a process by which an organisation tests its information security systems to find vulnerabilities before they are exploited by hackers. In this article, we will discuss why financial institutions need penetration testing in 2022 and how it can help them meet their compliance obligations.

What is penetration testing?

Think of penetration testing as a trial-and-error approach to security testing. It involves simulating real-world attacks on a system in order to identify any weaknesses that may exist. It can be used to test the security of an organisation's networks, systems, and applications. By identifying and fixing these weaknesses, organisations can reduce their risk of being targeted by real hackers.

Importance of penetration testing for financial institutions

In 2019 the percentage of leaked records that came from the financial industry was at an alarming rate of 62% even though it only accounted for 7% of the breaches (Bitglass). This implies that while financial institutions are not breached as often as other industries, the severity of the breaches is extremely high. Hence, there are several reasons why financial institutions should consider penetration testing:

  • It is essential for meeting compliance obligations such as GDPR, RBI-ISMS, FDIC, ISO 27001, etc.

  • It will identify vulnerabilities in advance before anything bad happens

  • It can help improve the overall security of an organisation's systems

  • It can help ensure that customer data is protected

  • It helps you live up to your reputation and keeps you competitive in the industry

How can penetration testing help meet compliance obligations?

Financial institutions have the most amount of compliance regulations to meet, many of which require regular IT security testing. Here are some examples:

  • The GDPR requires that organisations have sufficient technical security measures as well as ensure that the organisation is following appropriate security practises to protect the personal data of their customers. This can be achieved by regular penetration testing.

  • The RBI-ISMS requires financial institutions in India to implement a comprehensive information security management system (ISMS). This includes regular testing.

  • The FDIC requires financial institutions to have a cybersecurity program in place, which should include regular penetration testing.

  • ISO 27001 is a global standard for information security management, and it requires organisations to develop and implement a thorough and successful information security management system. This should include regular testing.

How does pentesting work?

Penetration testing is typically performed by an individual or a third-party security body. The testers will attempt to exploit any vulnerabilities they find in order to gain access to the system's data. They will employ a range of techniques to achieve this, including:

  • Using automated tools for scanning and testing

  • Manually testing

  • Penetration testing from within the network

  • Penetration testing externally

  • Black-box testing with insufficient knowledge about the system just like a real-world hacker

  • would have

  • White-box testing with complete knowledge about the system like a malicious insider

  • Simulating common attacks like SQL injection, XSS, DoS, DDoS, Social engineering attacks, Network attacks, using Malware, attempts to tamper with security settings, and several other methods.

What to have your penetration testing provider test for?

When performing an online penetration test, testers will attempt to exploit any vulnerabilities they find. However, not all vulnerabilities are created equal. Some are more severe and pose a greater risk of having a breach. Here are some of the most common vulnerabilities that should be tested for:

  • Vulnerabilities in web applications - web apps have become a popular target for hackers in recent years. They are often easy to exploit and can provide access to sensitive data.

  • Vulnerabilities in networks - unprotected networks can be easily attacked and may allow attackers access to confidential data.

  • Vulnerabilities in systems - outdated or poorly-configured systems can be exploited by hackers, giving them access to sensitive data.

  • Vulnerabilities in user accounts - weak passwords, easily guessed passwords, and lack of two-factor authentication can leave systems vulnerable to attack.

  • Insufficient security controls - organisations may have implemented security controls, but they may not be sufficient enough to protect the system from attack.

  • Incorrectly configured systems and devices - misconfigured systems and devices can leave an organisation open to attack.

  • Unsecured data stores - unprotected data stores can be accessed by hackers and may contain sensitive information.

  • Weak passwords and authentication mechanisms - easily guessed passwords and lack of two-factor authentication can leave systems vulnerable to attack.

  • Malicious software - malware could be lurking around on staff desktops without their knowledge. They can be used to steal data or take control of computers.

  • Social engineering attacks - attackers can use social engineering tactics to gain access to confidential data or systems.

  • Operating system security - weaknesses in the operating system can be exploited by hackers.

  • Outdated software and hardware - outdated software and hardware can leave an organisation open to attacks as they have been around for a long time with security flaws probably exposed years ago.

Conclusion

Financial institutions need to take steps to protect all the sensitive data that they deal with. Penetration testing is one of the most successful strategies for detecting and addressing IT infrastructure flaws. By implementing a penetration testing program, financial institutions can help protect their customers' data and meet the requirements of compliance frameworks like the FDIC, ISO 27001, and RBI-ISMS.


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Author Bio: Ankit Pahuja is the Marketing Lead & Evangelist at Astra Security. Ever since his adulthood (literally, he was 20 years old), he began finding vulnerabilities in websites & network infrastructures. Starting his professional career as a software engineer at one of the unicorns enables him in bringing "engineering in marketing" to reality. Working actively in the cybersecurity space for more than 2 years makes him the perfect T-shaped marketing professional. Ankit is an avid speaker in the security space and has delivered various talks in top companies, early-age startups, and online events.

Linkedin: https://www.linkedin.com/in/ankit-pahuja/

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