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Division of Labor Publishes Cybersecurity Steerage | Hodgson Russ LLP

Share this…FacebookPinterestTwitterLinkedin In April, the Division of Labor’s (“DOL”) Worker Advantages Safety Administration (“EBSA”), for the primary time, printed subregulatory…

By Staff , in Retirement Accounts , at May 30, 2021

In April, the Division of Labor’s (“DOL”) Worker Advantages Safety Administration (“EBSA”), for the primary time, printed subregulatory steering aimed immediately at sponsors of ERISA worker profit plans, ERISA plan fiduciaries, recordkeepers and plan members that addresses cybersecurity practices. Whereas the EBSA launch saying the steering attracts specific consideration to ERISA retirement plans, which maintain estimated plan belongings of $9.3 trillion, there may be nothing within the steering that limits the applying of the steering to ERISA retirement plans alone. It’s not simply the trillions of {dollars} plan belongings that benefit better safety from cybersecurity dangers, members’ private data (names, delivery dates, Social Safety numbers, and so forth.) additionally wants safety from elevated threats of unauthorized entry. Accordingly, ERISA welfare profit plans can be nicely served by additionally implementing the related cybersecurity practices described within the new steering.

EBSA’s cybersecurity steering takes the type of three individually printed paperwork:

• Ideas for Hiring a Service Supplier, which affords plan sponsors and fiduciaries ideas for prudently deciding on and monitoring service suppliers with sturdy cybersecurity practices.

• Cybersecurity Program Greatest Practices, which assists plan fiduciaries and recordkeepers in assembly their obligations to handle cybersecurity dangers.

• On-line Safety Ideas, which affords plan members and beneficiaries tips about how they’ll scale back the chance of fraud and loss to their retirement account when checking their retirement accounts on-line.

Though the DOL, through EBSA or in any other case, has not beforehand offered particular cybersecurity steering for ERISA worker profit plans, there have been growing oblique indicators of the DOL’s rising issues about cybersecurity threats to plan belongings and private data. Plan fiduciaries have an obligation to make sure correct mitigation of cybersecurity dangers. The brand new steering not solely affords useful insights on what practices and procedures EBSA would take into account essential to prudently mitigate cybersecurity dangers, but it surely suggests requirements of cybersecurity practices we would count on EBSA to search for in future audits and investigations.

The amplified give attention to cybersecurity not solely pertains to a plan sponsor’s personal inner administrative procedures, but in addition to the cybersecurity practices and procedures of recordkeepers and different service suppliers that plan sponsors choose to assist ERISA plan operations. Are plan sponsors asking the precise questions of recordkeepers and repair suppliers relating to their data safety requirements, practices and insurance policies, and are sufficient protections constructed into service agreements? The brand new steering supplies recommended traces of questioning that plan sponsors of all sizes ought to be asking as a part of their choice and monitoring course of for his or her service suppliers.

Greatest practices for plan service suppliers ought to embody:

  • Having a proper, nicely documented cybersecurity program.
  • Conducting prudent annual danger assessments.
  • Having a dependable annual third celebration audit of safety controls.
  • Clearly defining and assigning data safety roles and obligations.
  • Having sturdy entry management procedures.
  • Guaranteeing that any belongings or information saved in a cloud or managed by a 3rd celebration service supplier are topic to acceptable safety evaluations and unbiased safety assessments.
  • Conducting periodic cybersecurity consciousness coaching.
  • Implementing and managing a safe system growth life cycle (“SDLC”) program.
  • Having an efficient enterprise resiliency program addressing enterprise continuity, catastrophe restoration, and incident response.
  • Encrypting delicate information, saved and in transit.
  • Implementing sturdy technical controls in accordance with finest safety practices.
  • Appropriately reply to any previous cybersecurity incidents.

The truth that the brand new EBSA steering consists of on-line safety ideas for plan members displays a recognition that members have their very own function to play in decreasing the chance of fraud and loss with respect to their particular person retirement accounts. Plan sponsors will need to take into account making these on-line safety ideas a part of the usual plan enrollment and communication packages that go to members.

In gentle of the brand new steering, plan sponsors ought to be trying to develop acceptable inner cybersecurity practices and insurance policies (together with hiring practices and insurance policies for brand spanking new plan service suppliers), or to replace any such practices and insurance policies which can be already in place. For present service suppliers, a evaluate of supplier cybersecurity practices, insurance policies and contractual obligations (i.e., service settlement provisions), in addition to the event of acceptable mechanisms for monitoring cybersecurity practices going ahead, is advisable.

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