NASAA Series 65, Uniform Investment Adviser Law ExaminationLaws, Regulations, and Guidelines, including Prohibition on Unethical Business PracticesMedium
A registered investment adviser (IA) has developed a comprehensive cybersecurity policy. Which of the following elements is LEAST likely to be considered a mandatory component of a robust cybersecurity policy under current regulatory guidance?
- AEmployee training on cybersecurity awareness and best practices.
- BRegular risk assessments to identify vulnerabilities and threats.
- CProcedures for client notification in the event of a data breach.
- DDesignation of a Chief Information Security Officer (CISO) as a full-time role.
Show answer & explanationAnswer & explanation
Correct answer: D. Designation of a Chief Information Security Officer (CISO) as a full-time role.
While designating a CISO is a best practice for larger firms, it is generally not a mandatory regulatory requirement for all IAs, particularly smaller ones. Regulatory guidance typically focuses on the *functions* of security (risk assessment, training, incident response) rather than mandating a specific full-time role, especially for smaller firms.
Why the other options are wrong
- A. Employee training is crucial for preventing human-error related breaches and is a common regulatory expectation.
- B. Regular risk assessments are fundamental to identifying and mitigating cybersecurity risks, a core regulatory expectation.
- C. Data breach notification procedures are a critical component of regulatory compliance and client protection.
IA Cybersecurity Policy (Key Elements)
Essential components that an investment adviser's cybersecurity policy should include to protect client data and comply with regulatory expectations.
- Risk assessment.
- Incident response plan.
- Employee training.
- Data breach notification.
- Not necessarily a full-time CISO.
Memory trick: Cybersecurity needs Plans, People, and Prevention, not always a CISO.