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DOL Cybersecurity Steering: Managing Dangers to Employer-Sponsored Retirement Plans | Fisher Phillips

Share this…FacebookPinterestTwitterLinkedin The Authorities Accountability Workplace not too long ago urged the U.S. Division of Labor to launch steering on…

By Staff , in Retirement Accounts , at June 2, 2021



The Authorities Accountability Workplace not too long ago urged the U.S. Division of Labor to launch steering on cybersecurity issues in an effort to mitigate dangers to 401(okay) and different retirement plans. The GAO famous that there have been trillions of {dollars} in employer-sponsored outlined contribution retirement plans and that the DOL had not clarified whether or not plan fiduciaries have any accountability relating to cybersecurity points. On April 14, the DOL confirmed that worker profit plan fiduciaries have an obligation to handle cybersecurity dangers to their employer-sponsored plans.

In issuing this steering, the DOL acknowledged that plan fiduciaries have an obligation to mitigate cybersecurity dangers. With out adequate protections, the estimated 34 million outlined profit plan members in non-public pension plans and 106 million outlined contribution plan members protecting $9.3 trillion in belongings could also be in danger from cybersecurity threats. Accordingly, ERISA requires plan fiduciaries to take acceptable precautions to mitigate the danger. The DOL’s cybersecurity steering was launched in three components:

  1. Suggestions for Hiring a Service Supplier with Sturdy Cybersecurity Practices, which offers steering to plan fiduciaries within the hiring of service suppliers;
  2. Cybersecurity Program Greatest Practices, which offers finest practices for recordkeepers and different service suppliers; and
  3. On-line Safety Suggestions, which offers recommendation to plan members and beneficiaries who examine and handle their accounts on-line.

This steering was revealed within the type of “ideas” with some instructed “finest practices” primarily for plan fiduciaries to think about, relatively than establishing required steps or measures for plan fiduciaries to take. Nonetheless, the Suggestions for Hiring a Service Supplier and Cybersecurity Program Greatest Practices are sufficiently detailed that it will not be shocking if the DOL started to think about these steps because the minimal expectations for plan fiduciaries to adjust to their obligations to handle cybersecurity dangers.

It’s value noting that the GAO urged the DOL to launch steering referring to retirement plans and cybersecurity concerns in gentle of the trillions in belongings held in such plans. The DOL’s steering is equally geared to retirement plans, significantly the Suggestions for Hiring a Service Supplier doc, regardless of being directed at plan sponsors and fiduciaries regulated by the Worker Retirement Revenue Safety Act (ERISA). Whereas this steering might not explicitly check with employer-sponsored plans aside from retirement plans ruled by ERISA, plan fiduciaries ought to think about the ideas and finest practices for different plans, to the extent relevant. That is significantly true for different plans ruled by ERISA, reminiscent of well being and welfare plans, as a result of the identical fiduciary tasks relevant to retirement plans would apply to well being and welfare plans as effectively.

Suggestions for Hiring a Service Supplier

Sponsors of retirement plans aren’t any strangers to hiring service suppliers to work with their retirement plans and, accordingly, are conversant in the requirement to make sure a prudent course of for the choice and monitoring of such service suppliers. This steering now sweeps cybersecurity concerns into the subjects of consideration when deciding on service suppliers.

The DOL offers instructed inquiries to ask potential service suppliers with a view to gauge that service supplier’s cybersecurity practices. This contains asking the service supplier about their info safety requirements, audit insurance policies and outcomes, the way it validates its practices, what ranges of safety requirements it has met and carried out, and previous safety breaches. The responses must be thought of in opposition to different potential service suppliers, trade requirements, and the service suppliers observe report.

Past simply questions, the DOL steering suggests cautious consideration to the service contract. Underneath this DOL steering, the service contracts ought to, amongst different issues:

  • Require the service supplier to acquire third-party audits on an annual foundation;
  • Determine how rapidly a service supplier should inform plan fiduciaries of breaches; and
  • Specify the service supplier’s obligation to satisfy relevant federal, state, and native legal guidelines relating to privateness, confidentiality, or safety or participant’s private info.

Cybersecurity Program Greatest Practices

The DOL has recognized a 12-point finest follow system to be used by recordkeepers for plan-related IT programs and to be used by plan fiduciaries in making prudent choices relating to cybersecurity measures. In short, the 12 factors recognized by the DOL are:

  1. Have a proper, well-documented cybersecurity program. This features a system to determine dangers, defend belongings, knowledge and programs, detecting and responding to cybersecurity occasions, recovering from the occasion, disclosing (as acceptable), and restoring regular operations and providers. This program must be accredited by senior management, reviewed internally at the very least yearly, and must be reviewed by an unbiased third-party auditor to evaluate compliance and threats.
  2. Create a prudent, annual danger evaluation program. A manageable, efficient danger evaluation schedule must be established to determine and assess cybersecurity dangers and to explain how this system will mitigate recognized dangers. This program must be up to date to account for adjustments to info programs, service suppliers, or different adjustments to enterprise operations.
  3. Have interaction a third-party annual audit of the safety controls. Along with the interior measures adopted, an unbiased third-party auditor ought to assess the safety controls on an annual foundation. If the auditor’s report identifies any weaknesses, the plan fiduciary also needs to doc the correction of any recognized weaknesses.
  4. Clearly outline and assign info safety roles and tasks. Associated to the primary and second level, a prudent system to handle cybersecurity dangers ought to clearly determine who has accountability for every side of this system. The DOL particularly contemplates {that a} cybersecurity program should be managed on the senior govt stage after which executed by certified personnel. The Chief Data Safety Officer (CISO) would typically be an acceptable particular person to ascertain and keep this system.
  5. Guarantee sturdy entry management procedures. A powerful process must be established to ensure that customers are who they are saying they’re and that solely accredited customers are in a position to entry IT programs and knowledge. This is able to require an acceptable system of authentication and authorization.
  6. Assess third-party service supplier use of cloud computing. The safety applications and options of the cloud service supplier must be assessed as a part of the choice to have interaction with such service supplier. This would come with requiring a danger evaluation of the third-party service supplier, periodically assessing the service supplier, and making certain that the rules of any security program are glad. The Suggestions for Hiring a Service Supplier, mentioned above, would apply to cloud service suppliers.
  7. Conduct annual cybersecurity consciousness coaching. A powerful process ought to tackle danger from every stage, together with the worker stage. Accordingly, the DOL suggests conducting an annual cybersecurity consciousness to coach everybody to acknowledge assaults, assist forestall incidents, and guard in opposition to determine theft.
  8. Implement a safe system growth life cycle (SDLC) program. A safe SDLC program ensures that safety assurance actions, reminiscent of code overview, are an integral a part of the system growth course of.
  9. Implement a enterprise resiliency program to handle enterprise continuity, catastrophe restoration, and incident response. Enterprise resilience is the power to rapidly adapt to disruptions whereas sustaining steady enterprise operations and safeguarding folks, belongings, and knowledge. The DOL proposes making a enterprise continuity plan, catastrophe restoration plan, and an incident response plan.
  10. Encrypt delicate knowledge. A cybersecurity system ought to implement present, prudent requirements for encryption knowledge that’s saved and for knowledge that’s transmitted.
  11. Implement sturdy technical controls to implement finest safety practices. Technical safety controls must be carried out that preserve {hardware}, software program, and firmware updated, conduct routine knowledge backup, and guarantee routine patch administration.
  12. Be conscious of cybersecurity incidents or breaches. Guarantee acceptable motion is taken to guard the plan and plan members within the occasion of a cybersecurity incident or breach. Such motion might embody informing regulation enforcement, notifying insurers, investigating the incident, and fixing the issue or weak spot that brought on the breach.

On-line Safety Suggestions

The ultimate part of the DOL steering focuses on steps and actions that plan members and beneficiaries can take to mitigate potential cybersecurity dangers on their finish. The following tips embody common monitoring of their accounts, using sturdy passwords with multi-factor authentication, updating private contact info, and signing up for account exercise notices. As a part of this recommendation, the DOL additionally offers people with some normal finest follow concerns when accessing accounts or having an internet presence typically, reminiscent of being conscious of phishing assaults, using antivirus software program, and the need to replace and preserve apps and software program present.

Shifting Ahead with the DOL Steering

Cybersecurity has been an growing concern throughout the board as processes and platforms have more and more moved to distant or digital suppliers. Given this panorama of digital providers and the DOL’s latest steering, plan fiduciaries ought to overview and analyze the processes at present in place to handle cybersecurity dangers. 

Plan fiduciaries also needs to overview their present service supplier contracts and hiring processes, significantly for any contracts which are developing for renewal or termination. The DOL’s steering will should be weighed in opposition to present practices of plan sponsors and plan fiduciaries and, if there are any gaps, some further steps could also be required to make sure plan fiduciaries are in a position to fulfill all of their obligations relating to cybersecurity issues.



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