On April 10, 2018, the Federal Financial Institutions Examination Council (the “FFIEC”), an interagency body composed of the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency and the State Liaison Committee, issued guidance to assist financial institutions in analyzing the use of cyber insurance in an effective risk management program (the “Guidance”).

The Guidance provides, among other things, that in evaluating cyber insurance options institutions should:

  • Involve Multiple Stakeholders in the Cyber Insurance Decision. Involve multiple stakeholders, including management and appropriate departments, in assessing the sufficiency of existing control environments to address cyber risk exposure.
  • Perform Due Diligence. Perform adequate due diligence to understand available options for cyber insurance coverage and to understand the following: (i) the policy’s terms, coverage exclusions and costs; (ii) the potential benefits and costs associated with the insurance coverage; (iii) the variances in different kinds of policies from different providers; (iv) how coverage is triggered and how exclusions to coverage apply; (v) the financial strength (ratings) and claims paying history of the insurance company providing the coverage; and (vi) that outside advisors, such as attorneys, may assist in the due diligence process to assess the benefits of cyber insurance relative to cost.
  • Evaluate Cyber Insurance Annually. Evaluate cyber insurance in the annual insurance review and budgeting process at the board of directors level.

The Guidance states that “it does not contain any new regulatory expectations.” However, another way to interpret the Guidance is that it constitutes a strong suggestion that every covered institution should carefully consider the benefits of cyber insurance and, should it opt out of such coverage, to have well documented reasons in support of that decision.

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Photo of Juan M. Arciniegas Juan M. Arciniegas

Mr. Arciniegas works primarily as a derivatives lawyer and covers markets for over-the-counter (OTC) derivatives, structured finance products and listed futures. He advises on every stage throughout the life cycle of a derivatives transaction, providing assistance to a wide range of market participants engaged in the markets in various capacities. Regulatory matters range from assisting clients on financial reform legislation, registration and membership with the CFTC, NFA, and other financial market utilities, to providing guidance to commercial end-users and sell-side participants on exemptions, cross-border access issues, and matters involving the overlapping jurisdiction of securities and commodities regulation. Transactional matters include the negotiation and implementation of comprehensive documentation for agency-MBS, cleared and OTC derivatives, FX, futures, loan-level hedging arrangements, prime brokerage, repurchase transactions, securities lending, structured finance transactions, and related industry protocols implementing changes in those markets. Mr. Arciniegas has appeared before the CFTC, the Federal Reserve, the SEC, and is a frequent speaker and published author on futures and derivatives topics.

Photo of James M. Kane James M. Kane

Mr. Kane serves as the Co-Chair of the Financial Institutions group for Vedder Price. His practice is focused on financial institutions and their officers and directors. He serves his clients in a number of different capacities. He serves as the regulatory and corporate counsel for many institutions. Calling upon his experience as a regulator, as a past director of two different community banks, and as a private practitioner for nearly 20 years, Mr. Kane is able to offer practical and experienced legal advice that few attorneys can match. In this capacity, he has counseled clients on general corporate, regulatory and securities matters, on new products and on mergers and acquisitions.

Photo of Blaine C. Kimrey Blaine C. Kimrey

Blaine C. Kimrey is a Shareholder at Vedder Price, Chair of the Media & Entertainment Litigation practice group, and a member of the Privacy, CyberSecurity, & Media practice group.  A former journalist at two daily newspapers (the Austin American-Statesman and the Arkansas Democrat-Gazette), Mr. Kimrey is a trial lawyer who has dedicated more than 20 years to working for and defending media entities. Mr. Kimrey’s practice, however, extends well beyond media defense, focusing on a broad range of direct and class action litigation involving topics as diverse as privacy, consumer deception, intellectual property, entertainment, insurance, banking, real estate, civil rights, telecommunications, and mass catastrophes and torts.  Among other accolades, Mr. Kimrey is Chambers USA Band 2 rated for Media & Entertainment Litigation in the state of Illinois, is listed in Best Lawyers in America for Intellectual Property Litigation, and is AV-rated by Martindale-Hubbell.

Photo of Jennifer Durham King Jennifer Durham King

Ms. King concentrates her practice in capital markets and corporate securities transactions, with a specific focus on financial institutions. Ms. King regularly represents issuers and underwriters as lead counsel in a broad range of capital markets transactions, including public and private debt and equity offerings, mergers and acquisitions, and capital planning and formation. In 2017, Ms. King was selected as an Illinois Leading Lawyer in the categories of Corporate Finance Law and Securities & Venture Finance Law.

Ms. King also counsels public companies on their reporting and disclosure obligations under the federal securities laws, as well as on a variety of corporate governance matters, including compliance with the Sarbanes-Oxley Act, Dodd-Frank Act, and stock exchange requirements, creation and implementation of corporate compliance programs, and shareholder and board of directors matters.

Photo of Daniel C. McKay, II Daniel C. McKay, II

Daniel C. McKay, II concentrates his practice in the representation of financial institutions and corporations and their officers, directors and shareholders in connection with mergers and acquisitions, securities offerings, corporate finance, corporate governance and regulatory and compliance matters. He has been involved in more than 150 bank or thrift  mergers and acquisitions/securities offerings, with aggregate consideration of these deals totaling over $50 billion.

Photo of James W. Morrissey James W. Morrissey

Mr. Morrissey concentrates his practice in the representation of financial institutions and corporations and their officers, directors and shareholders in connection with mergers and acquisitions, securities offerings, corporate finance, corporate governance and regulatory and compliance matters. He has represented clients in numerous bank and thrift mergers and acquisitions and securities transactions. In addition, he has represented clients with respect to various bank regulatory matters, including advising clients with respect to preparing for regulatory exams and responding to enforcement actions.

Photo of Lisa M. Simonetti Lisa M. Simonetti

Lisa M. Simonetti is a Shareholder at Vedder Price and a member of the Litigation group. Ms. Simonetti focuses on the defense of complex litigation, including class actions, mass actions and regulatory investigations and enforcement actions. Ms. Simonetti represents a wide array of financial services companies, including credit card issuers, mortgage lenders, e-commerce companies, automotive finance companies, national banks, student lenders and savings and loan associations.

Photo of Mark C. Svalina Mark C. Svalina

Mr. Svalina advises corporate clients, financial institutions and FinTech companies on significant corporate transactions. He focuses his practice on representation of financial institutions and their officers, directors and shareholders in connection with mergers and acquisitions, corporate finance, corporate governance, and regulatory and compliance matters. In addition, he has represented clients with respect to various bank regulatory matters, including advising clients with respect to preparing for regulatory exams, responding to enforcement actions, new products/services and federal and state compliance issues.