Observing that the cybersecurity guidance provided this year by the Department of Labor (DOL) is very high level, leaving details somewhat fuzzy, legal experts suggest specific actions for plan fiduciaries. Beware that the DOL has not delayed the effective date and is in fact moving rapidly to ensure the cybersecurity protocols are followed.
Be Prudent
JD Supra calls the DOL’s “rapid progression” from the release of cybersecurity guidance to enforcement during reviews and audits concerning and encourages prudent fiduciaries to take these actions immediately:
- Contact each of your providers and ask where they are in evaluating and implementing DOL Cybersecurity Guidance and get firm commitments for when to expect to see documentation.
- Ask those providers whether they have already determined that they will comply or won’t comply with any specific aspects of the guidance.
- Review contracts with providers to determine what cybersecurity protection currently exists and consider whether there are specific shortfalls that can be addressed before hearing from providers.
- Track the communications and incorporate the status of each provider into regular meetings and minutes of plan administrator committee meetings.
As you act to implement the DOL’s cybersecurity guidance, keep in mind that under ERISA law, any individual involved with the management of a retirement plan can be held personally accountable for a breach of fiduciary duties. For example, if cyber attackers get their hands on participant information, plan sponsors could be faced with numerous lawsuits for fiduciary failures related to cyber security standards. That’s why Colonial Surety’s affordable Fiduciary Liability Insurance provides protection for your assets in the event of claims of actual or alleged breaches of duty—and automatically includes $50,000 of Cyber Liability Insurance. With lawsuits and expectations on the rise, don’t wait: Obtain Fiduciary with Cyber Liability Insurance Here.
A Risk and A Blind Spot
Risk management experts caution that cybersecurity is both a significant threat and a major blind spot for many 401k plans—especially in small businesses which frequently go without the protections put in place by large corporations. Access to sensitive data requires a stronger set of checks and balances then ordinarily in place. Clearly, retirement accounts are a gateway to the two things cybercriminals most want: personal information and money. Attorneys are advising plan sponsors to get on top of the Department of Labor’s new cyber security guidelines right away. Use the DOL’s basics of online security to directly educate participants in cyber safety practices. Be sure to document all actions you take for the protection of the plan.
Secure protection for yourself too: Colonial Surety’s new Fiduciary-Cyber Liability Insurance package, available to any company that sponsors a retirement plan and already has an ERISA bond in place, protects the assets of individuals, like plan sponsors, involved in the management of the retirement plan, in the event of a fiduciary lawsuit. Additionally, the unique Cyber Liability Insurance included in the package protects businesses and their pension plans from covered losses and response expenses in the event of a cyber breach.
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