European Union: Setting The Controllers' Conduct Expectations During Cyber-Resilience Exercises

Last Updated: 15 July 2019
Article by Michael Huertas

Cyber-resilience remains an EU-wide supervisory priority and one also advanced equally by central banks in their financial stability role. In December 2018, we published our analysis1 on the European Central Bank's (ECB) new Cyber-Resilience Oversight Expectations (the CROE) for financial market infrastructures (FMI). This built upon its 2018 launch of the TIBER-EU Framework on "ethical red-teaming" by setting standards on what red teams2 should do and how eligible providers of recognized TIBER tests ought to be selected. 3

"Red-teaming" takes its name from war games and refers to the process of testing vulnerabilities along with the readiness and resilience of a test subject and the capabilities and effectiveness of its response force i.e., the Blue Team. Red Team actions are unknown and masked to the Blue Team and only a select group, i.e. the White Team, have access to details of the test and the "flags" i.e., the objectives that the Red Team has to "capture." During December 2018, the ECB published its TIBER-EU White Team Guidance4 (the WTG) which complements the other guides5 and sets out the roles and responsibilities of the White Team in a Threat Intelligence-based Ethical Red (TIBER) Teaming Test.

This Client Alert assesses the expectations the WTG requires market participants to meet and what affected Banking Union Supervised Institutions (BUSIs) may want to consider. This Client Alert should be read with other coverage in this series. As cyber-resilience and stress-testing of BUSIs continues to pick up pace, this most recent ECB publication and the expectations set in the WTG will matter to not just the White Team but possibly to other business as usual operating units and stakeholders within firms as this "voluntary" TIBER-EU Framework is backed by very certain supervisory expectations. These expectations apply both to the cyber domain as well as to the fundamentally human and adversarial interaction between attackers, defenders and users of online systems of BUSIs.

What is a White Team?

White Team members are the only members that know that a TIBER-EU- test is taking place and are responsible for ensuring that the testing − during the preparation, testing and closure phases of an exercise − is conducted in a timely and controlled manner, including with approval from governance functions of the entity and with risk management measures in place. The White Team is also responsible for ensuring the testing is conducted in a manner that maximizes the Blue Team's learning experience.

Moreover, White Team members must closely cooperate with the TIBER Cyber Team (TCT) and the TIBER Test Manager from the relevant competent supervisory authority. Cooperation is also required with third party providers and trusted contacts, especially where parts of a third party provider may themselves be members of or otherwise support members of a Blue Team. As a result, both White Team Leaders and its members, which should be kept to a as small a number as possible, need to meet certain criteria to be eligible for inclusion and be pre-cleared by the TCT. These include taking the following steps:

  1. Retaining the White Team Lead (plus relevant deputy) and subject matter experts with the right level of authority and expertise.
  2. In addition to having one White Team Leader, limiting the White Team composition to less than five functions and subject matter experts with relevant cyber-skill and operational expertise. These may include the chief operating officer (COO) or other governance and/or executive function staff such as the chief information security officer (CISO) or chief technology officer (CTO) as they will not likely be involved in the day to day operations of the test or be part of the Blue Team. Moreover, they are also unlikely, certainly in the views of the ECB, to be the White Team Lead as instead their presence is to act as liaison between the White Team and the entity's board as well as to be responsible for agreeing the scope and signing of attestation on behalf of the entity.
  3. Ensuring that the White Team lead has proven technical expertise in IT, red-team and cyber-resilience testing as well as the non-technical duties expected of it in terms of people management and proven experience with project management, C-level communication, crisis management, procurement and vendor management. A White Team lead may also be delegated to a party unrelated to the entity being tested. In such instances, in addition to needing to sign a NDA, the external White Team Leader cannot work for a Threat Intelligence or Red Team provider procured for the TIBER-EU framework.
  4. White Team members themselves are required to have extensive and specific knowledge of the business processes within an entity and its IT landscape as well as risk management expertise as it impacts cyber-resilience and red team testing and likely tactics, techniques and procedures used by cyber threat actors. In practice this experience should be representative of the diverse areas of the relevant entity being tested not only so as to ensure representative testing, but also to ensure certain critical business infrastructure and deliverables are not adversely affected.
  5. White Team members should involve wider specific subject matter expertise, such as procurement and legal expertise as they may be needed and be required to observe confidentiality and sign non-disclosure agreements (NDA) as those providing the support will not be White Team members.

Conclusion

The WTG's approach is that an appropriately resourced White Team will enable better testing and thus better ability to identify, mitigate and manage cyber risks. In addition to ensuring an appropriate composition of the team, BUSIs will need to consider how their White Team sets the tone from the top in terms of prompt and accurate data capture, triage analysis, filtering of false positives and translation into TIBER-EU Test outcomes to meet not only the supervisors' needs but also those of the business.

With the ever increasing pace of innovation and connectivity reshaping how BUSIs and other peers in the financial markets as well as their customers interact with one another the future threats require forward thinking on cyber-resilience. That includes both human and technical aspects as well as the relevant decision-making capabilities and defensive skill sets to thwart attacks and protect end-users but also to "normalize" how the relevant board of a BUSI views and approaches cyber-risk and cyber-resilience before and after an incident and in line with the BUSI's overall risk appetite framework.

Our Eurozone Hub lawyers are assisting a number of firms in their cyber-resilience policies and relevant supervisory dialogue, including how to operationalize the relevant desired outcomes in documentation and non-documentation workstreams. If you would like to discuss any of the items mentioned above or how the TIBER-EU Framework and the ECB's cyber-resilience expectations may affect your business more generally, please contact our Eurozone Hub key contacts.

Footnotes

1 See our dedicated coverage here.

2 See our dedicated coverage here.

3 See our dedicated coverage here.

4 Available here.

5 And was noted by the December 2018 Review by the Bank for International Settlements – see details here and the context regarding a range of practices.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

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