According to a recent survey, about 45% of companies do not have a Chief Information Security Officer (CISO). As West Monroe’s “The Importance of a CISO” observes, it would be terrific for all organizations to have a CISO, but that simply may not be practical for some, particularly smaller organizations. Recent internal audit guidance issued by the federal Department of Labor (DOL), however, directs its investigators to verify the designation of a CISO when auditing retirement plans.

Nearly a year ago, on April 14, the DOL issued cyber security guidance for retirement plans (Guidance). Shortly thereafter, the Department began to weave its newly-minted cybersecurity guidance into plan audits. Basically, the Guidance has three prongs:

  • Cybersecurity best practices for the plan and their service providers
  • Exercise of prudence as an ERISA fiduciary when selecting service providers with respect to cybersecurity practices
  • Educating plan participants and beneficiaries on basic rules to reduce risk of fraud or loss to their retirement plan accounts

The DOL offers 12 helpful “best practices” for any cybersecurity program. Number four on its list provides:

  1. Clearly Defined and Assigned Information Security Roles and Responsibilities. For a cybersecurity program to be effective, it must be managed at the senior executive level and executed by qualified personnel. As a senior executive, the Chief Information Security Officer (CISO) would generally establish and maintain the vision, strategy, and operation of the cybersecurity program which is performed by qualified personnel who should meet the following criteria:
    • Sufficient experience and necessary certifications.
    • Initial and periodic background checks.
    • Regular updates and training to address current cybersecurity risks.
    • Current knowledge of changing cybersecurity threats and countermeasures

Currently, DOL personnel who conduct retirement plan audits are likely to be very familiar with the full range of ERISA requirements for retirement plans. Until recently, however, the DOL had not made clear that cybersecurity was one of those requirements. In an effort to assist its investigators when auditing such plans, the agency provided an investigative guide that closely tracks the Guidance, and offers investigators suggestions for practices to look for during the cybersecurity audit. With regard to number four above, the investigative guide urges investigators to:

Look for:

    • Evidence verifying the designation of a senior leader as the Chief Information Security Officer (CISO) and demonstrating the CISO’s qualifications and accountability for the management, implementation, and evaluation of the cybersecurity program.

As DOL investigators grapple with applying the Guidance along with their internal resources, it remains unclear whether they will be fixated on requiring in all cases an express designation of a “CISO” by all retirement plan sponsors and plan service providers. Of course, it will be important for organizations to clearly define and assign information security roles and responsibilities. The lack of a “CISO” designation alone should not necessarily mean an organization’s data security efforts are rudderless.

Persons in positions such as Director of IT, Chief Information Officer, or IT manager, all may help to support the organization’s efforts to maintain the privacy and security of plan data. But their roles and expertise may not be sufficient to fully address data security for the organization, the plan, or its service providers. For instance, persons in these positions may be appropriately focused on the organization’s IT systems and equipment for which security is only one issue. While these roles are important as well, the focus should be to make sure there is qualified senior leadership with information security roles and responsibilities. The West Monroe article above identifies nicely the attributes such senior leadership might have to fill this need:

  • Executive Presence: The [leader] should have the executive presence to effectively represent the organization’s position regarding information security and the ability to influence executives. They need to be able to identify and assess threats, and then translate the risks into language executives can understand
  • Business Knowledge: The [leader] needs to understand business operations and the critical data that organization is trying to protect. She needs to view business operations from a risk versus security perspective and implement controls to minimize risks and business disruptions.
  • Security Knowledge: A [leader] must be capable of understanding complex security configurations and reports from the technical perspective, and then be capable of translating the relevant technical details into language that other executives can understand.

This raises an important question for many organizations struggling to address cybersecurity, and not just for their retirement plans – how does the organization assess the qualifications of candidates for such a position, and then the individual(s)’ performance when in the position(s). Another important question, suggested above, is whether smaller organizations can support a position with this level of expertise and qualifications. The DOL’s investigative guide seems to acknowledge this issue:

For many plans – especially small plans – IT systems, data, and cybersecurity risks are chiefly managed by third-party recordkeepers and service providers, and these service providers are an appropriate focus for an investigation of cybersecurity practices.

In doing so, the DOL also brings into focus to the plan’s service providers.

The key takeaway is to think carefully about your organization’s approach to managing its cybersecurity obligations and requirements, including with respect to employee benefit plans. Organizations should have a qualified member of its senior leadership assigned and accountable for the management, implementation, and evaluation of its cybersecurity program.

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Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP)…

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Joe also is a member of the firm’s Employee Benefits practice group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and management of data, as well as the impact and regulation of social media. He also counsels companies on compliance, fiduciary, taxation, and administrative matters with respect to employee benefit plans.

Privacy and cybersecurity experience – Joe counsels multinational, national and regional companies in all industries on the broad array of laws, regulations, best practices, and preventive safeguards. The following are examples of areas of focus in his practice:

  • Advising health care providers, business associates, and group health plan sponsors concerning HIPAA/HITECH compliance, including risk assessments, policies and procedures, incident response plan development, vendor assessment and management programs, and training.
  • Coached hundreds of companies through the investigation, remediation, notification, and overall response to data breaches of all kinds – PHI, PII, payment card, etc.
  • Helping organizations address questions about the application, implementation, and overall compliance with European Union’s General Data Protection Regulation (GDPR) and, in particular, its implications in the U.S., together with preparing for the California Consumer Privacy Act.
  • Working with organizations to develop and implement video, audio, and data-driven monitoring and surveillance programs. For instance, in the transportation and related industries, Joe has worked with numerous clients on fleet management programs involving the use of telematics, dash-cams, event data recorders (EDR), and related technologies. He also has advised many clients in the use of biometrics including with regard to consent, data security, and retention issues under BIPA and other laws.
  • Assisting clients with growing state data security mandates to safeguard personal information, including steering clients through detailed risk assessments and converting those assessments into practical “best practice” risk management solutions, including written information security programs (WISPs). Related work includes compliance advice concerning FTC Act, Regulation S-P, GLBA, and New York Reg. 500.
  • Advising clients about best practices for electronic communications, including in social media, as well as when communicating under a “bring your own device” (BYOD) or “company owned personally enabled device” (COPE) environment.
  • Conducting various levels of privacy and data security training for executives and employees
  • Supports organizations through mergers, acquisitions, and reorganizations with regard to the handling of employee and customer data, and the safeguarding of that data during the transaction.
  • Representing organizations in matters involving inquiries into privacy and data security compliance before federal and state agencies including the HHS Office of Civil Rights, Federal Trade Commission, and various state Attorneys General.

Benefits counseling experience – Joe’s work in the benefits counseling area covers many areas of employee benefits law. Below are some examples of that work:

  • As part of the Firm’s Health Care Reform Team, he advises employers and plan sponsors regarding the establishment, administration and operation of fully insured and self-funded health and welfare plans to comply with ERISA, IRC, ACA/PPACA, HIPAA, COBRA, ADA, GINA, and other related laws.
  • Guiding clients through the selection of plan service providers, along with negotiating service agreements with vendors to address plan compliance and operations, while leveraging data security experience to ensure plan data is safeguarded.
  • Counsels plan sponsors on day-to-day compliance and administrative issues affecting plans.
  • Assists in the design and drafting of benefit plan documents, including severance and fringe benefit plans.
  • Advises plan sponsors concerning employee benefit plan operation, administration and correcting errors in operation.

Joe speaks and writes regularly on current employee benefits and data privacy and cybersecurity topics and his work has been published in leading business and legal journals and media outlets, such as The Washington Post, Inside Counsel, Bloomberg, The National Law Journal, Financial Times, Business Insurance, HR Magazine and NPR, as well as the ABA Journal, The American Lawyer, Law360, Bender’s Labor and Employment Bulletin, the Australian Privacy Law Bulletin and the Privacy, and Data Security Law Journal.

Joe served as a judicial law clerk for the Honorable Laura Denvir Stith on the Missouri Court of Appeals.