Banks opting for Outsourced Managed Security Services
Eighty-three per cent of the world's largest banks openly admit that their systems were threatened last year by external attackers, according to a 2004 Deloitte Security Study of CIOs and IT security officers representing the world's 100 largest banks. In 2002, the figure stood at only 39 per cent. Not only is the number of attacks increasing, but so too are their intensity: 40 per cent of the banks affected reported that those attacks resulted in financial losses.
To combat today's professional and targeted attacks, banks are increasingly employing intelligent IT infrastructures. Yet, security systems are often so complex that even large financial institutions find them challenging to cope with. A growing number of banks are therefore opting to outsource parts of their IT security to external service providers -- a development confirmed by the Deloitte study which revealed that outsourcing security tasks is becoming more commonplace, especially in Europe and among larger financial institutions.
The growing importance of IT as a competitive factor, as well as increasing cost pressures, mean that outsourcing has become more of a strategic business decision for the financial sector. The trend among large, multinational financial institutions is evident: J. P. Morgan Chase, Bank of America and Deutsche Bank all opted last year to outsource parts of their IT or communication technology.
This shift in the financial sector reached a new dimension with Managed Security Services (MSS). MSS enable financial institutions and other companies to entrust their IT security to specialists – either completely or in part . The most frequently outsourced applications currently include Managed Firewall Services and Managed Intrusion Detection Services.
Yet, some financial institutions still worry that outsourcing will leave them at the mercy of service providers. "We see our Managed Security Services as co-management not ‘outsourcing' in the classical sense," said Souheil Badran, vice president, VeriSign EMEA. "Ultimately, our clients maintain complete control over their systems. We merely provide services that companies are not in a position to perform internally – for instance the early recognition of global attack patterns, and identification and implementation of suitable countermeasures." MSS providers like VeriSign have a very broad perspective of attacks on the internet because they manage systems for many different enterprises, enabling them to draw conclusions on the actual threat posed by an attack.
It is precisely for this reason that leading banks like Merrill Lynch and US Bancorp outsourced their complete global security to experts. Merrill Lynch, which manages fixed assets worth trillions of dollars for its customers, has invested consistently in its security infrastructure. Despite state-of-the-art technology and comprehensive information on attack patterns from its own systems, Merrill Lynch was lacking additional global information to reliably assess attacks. By outsourcing its firewall and intrusion detection services Merrill Lynch can now reliably make assessments and initiate the right countermeasures.
"A provider like VeriSign, which looks after many companies at once and has access to large volumes of data through its management of .com domains, has security-relevant information at its disposal like no other company. We now receive analyses of the incidents in relation to other events around the world and on the internet. This enables us to make far better decisions and to benefit from an early warning system," said David Bauer, chief information security officer at Merrill Lynch.
With MSS, Merrill Lynch is also addressing issues around internal risks. According to the industrial federation for the IT sector, CompTIA, the most ‘successful' attacks are the result of IT security officers making wrong decisions based on attacks that they underestimated.
In summary, Managed Security Services play a critical role in offering IT experts valuable information and rendering security systems more intelligent – a basic prerequisite for financial institutions to protect themselves effectively against the growing number of attacks.
