The Gramm-Leach-Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999, is a federal law that mandates financial institutions to protect the privacy and security of their customers’ personal information. GLBA compliance is enforced through periodic audits, which can be challenging for financial institutions that are not adequately prepared. In this Peak Post, we will discuss 10 common mistakes in a GLBA audit and how to avoid them.

1. Inadequate risk assessment

GLBA requires financial institutions to conduct regular risk assessments to identify potential vulnerabilities in their information security systems. One common mistake is not conducting a comprehensive risk assessment or not documenting the findings. To avoid this mistake, ensure that your organization performs regular risk assessments and documents the findings, as well as implements necessary security measures to address identified risks.

2. Insufficient employee training and awareness

GLBA mandates that financial institutions provide regular training to employees who handle customer information. Organizations often fail to offer adequate training or to document training sessions. To avoid this mistake, develop a thorough training program that covers GLBA requirements and maintain records of all training sessions and attendees.

3. Failure to maintain proper documentation

Proper documentation is crucial for demonstrating GLBA compliance during an audit. Many financial institutions fall short in maintaining the required documentation. To avoid this mistake, create a centralized repository for all GLBA-related documents, including policies, procedures, risk assessments, and training records. Regularly review and update these documents to ensure they remain current and accurate.

4. Weak access controls

Access controls are critical to protect customer information from unauthorized access. Common mistakes in this area include inadequate password policies, insufficient access controls, and failure to implement multi-factor authentication. To avoid these mistakes, establish strong password policies, limit access to sensitive data based on the principle of least privilege, and implement multi-factor authentication for accessing critical systems.

5. Lack of a formal information security program

GLBA requires financial institutions to establish a formal information security program to protect customer information. Some organizations fail to develop a comprehensive program, leading to audit findings. To avoid this mistake, create a formal information security program that includes policies, procedures, and technical measures to protect customer information, and ensure that it is regularly reviewed and updated.

6. Inadequate monitoring and auditing

Regular monitoring and auditing of information security systems are essential for detecting and responding to potential security incidents. A common mistake is not performing regular audits or monitoring system activity. To avoid this mistake, implement an ongoing monitoring and auditing program that includes periodic security assessments and regular reviews of system activity logs.

7. Insufficient data encryption

Data encryption is a critical component of protecting sensitive customer information. Many financial institutions fail to encrypt data, both at rest and in transit, leaving it vulnerable to unauthorized access. To avoid this mistake, implement strong encryption protocols for all sensitive data, both when stored and transmitted.

8. Ineffective incident response plan

GLBA requires financial institutions to have an incident response plan in place to address security incidents involving customer information. Organizations often lack a comprehensive incident response plan or fail to test it regularly. To avoid this mistake, develop an incident response plan that outlines roles and responsibilities, communication protocols, and steps to be taken in the event of a security incident. Test the plan regularly to ensure its effectiveness.

9. Non-compliance with privacy notices

Under GLBA, financial institutions are required to provide customers with privacy notices that clearly explain how their personal information is collected, used, and shared. A common mistake is not providing these notices or not updating them as required. To avoid this mistake, ensure that your organization provides accurate and up-to-date privacy notices to customers and maintains records of their distribution.

Understanding and addressing the “Common Mistakes in a GLBA Audit and How to Avoid Them” is crucial for your organization’s long-term success and compliance. By taking the necessary steps to prevent these mistakes, your organization can maintain a strong security posture and protect sensitive customer information. Implementing best practices, keeping up with regulatory changes, and providing regular training to your employees will ensure a smoother GLBA audit process. Stay vigilant, adhere to the rules, and reap the rewards of a compliant and secure organization.

Please reach out if you would like to learn more about how Audit Peak can assist you with your GLBA compliance or for a free consultation. WE WILL TAKE YOU TO THE PEAK.