G7 FUNDAMENTAL ELEMENTS OF CYBERSECURITY FOR THE FINANCIAL SECTOR Increasing in sophistication, frequency, and persistence, cyber risks are growing more dangerous and diverse, threatening to disrupt our interconnected global financial systems and the institutions that operate and support those systems. To address these risks, the below nonbinding, high-level fundamental elements are designed for financial sector private and public entities to tailor to their specific operational and threat landscape, role in the sector, and legal and regulatory requirements. The elements serve as the building blocks upon which an entity can design and implement its cybersecurity strategy and operating framework, informed by its approach to risk management and culture. The elements also provide steps in a dynamic process through which the entity can systematically re-evaluate its cybersecurity strategy and framework as the operational and threat environment evolves. Public authorities within and across jurisdictions can use the elements as well to guide their public policy, regulatory, and supervisory efforts. Working together, informed by these elements, private and public entities and public authorities can help bolster the overall cybersecurity and resiliency of the international financial system. Element 1: Cybersecurity Strategy and Framework. Establish and maintain a cybersecurity strategy and framework tailored to specific cyber risks and appropriately informed by international, national, and industry standards and guidelines. The purpose of a cybersecurity strategy and framework is to specify how to identify, manage, and reduce cyber risks effectively in an integrated and comprehensive manner. Entities in the financial sector should establish cybersecurity strategies and frameworks tailored to their nature, size, complexity, risk profile, and culture. Informed by the cyber threat and vulnerability landscape, a jurisdiction can also establish sector-wide cybersecurity strategies and frameworks that outline how cooperation occurs between entities and public authorities in the financial sector, with sectors upon which the financial sector depends, and with other relevant jurisdictions. Element 2: Governance. Define and facilitate performance of roles and responsibilities for personnel implementing, managing, and overseeing the effectiveness of the cybersecurity strategy and framework to ensure accountability; and provide adequate resources, appropriate authority, and access to the governing authority (e.g., board of directors or senior officials at public authorities). Effective governance structures reinforce accountability by articulating clear responsibilities and lines of reporting and escalation. Effective governance also mediates competing objectives and fosters communication among operating units, information technology, risk, and controlrelated activities. Consistent with their missions and strategies, boards of directors (or similar oversight bodies for public entities or authorities) should establish the cyber risk tolerance for their entities and oversee the design, implementation, and effectiveness of related cybersecurity programs. 1

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