The Legal Framework for Managing Cybersecurity Risks in Financial Institutions

Abstract

Cybersecurity risks present a significant and growing challenge for financial institutions, whose operations are integral to the global economy. As cyber threats evolve in sophistication, financial institutions face increasing pressure to adopt effective cybersecurity strategies that comply with both legal requirements and industry best practices. This article explores the key global and national legal frameworks that guide the management of cybersecurity risks within the financial sector. Through a detailed analysis of international standards such as the NIST Cybersecurity Framework, ISO/IEC 27001, and regional regulations like the EU’s General Data Protection Regulation (GDPR) and the U.S. Gramm-Leach-Bliley Act (GLBA), the article highlights the role of these frameworks in shaping the cybersecurity practices of financial institutions. It also examines emerging risks, such as threats related to digital finance and the integration of new technologies like artificial intelligence and blockchain, which pose additional challenges to cybersecurity governance. The article further compares the legal approaches across different jurisdictions, exploring how regulations in the U.S., Europe, and Asia-Pacific differ in their approach to cybersecurity. By offering a comparative perspective, this article underscores the need for a more harmonized global legal framework to address the increasingly complex cybersecurity threats facing the financial industry. Ultimately, it argues that financial institutions must not only comply with legal requirements but also foster a proactive cybersecurity culture that embraces both technological and legal solutions to ensure long-term security and resilience.