Financial institutions use risk management measures and technology security to protect sensitive information and the regional economy. They also use balance sheet security to determine when to buy or create securities and network security to prevent data breaches. Third-party security firms perform vetting actions to prevent fraudulent partnerships.
A financial institution is deeply involved in the flow of money into and out of the capital markets. Whether facilitating business on behalf of clients or using its resources to transact the markets, a financial institution firm seeks to protect its own security, that of clients, and potentially the regional economy. Risk management measures are used to provide some protection to the sensitivity of data and the way financial resources are directed. Additionally, financial institution security surrounding the use of technology systems is used to protect sensitive information from competitors and against any other breaches.
Financial institution security for an organization’s balance sheet, which lists assets and liabilities, is a type of security used among banks. This type of security can be addressed by determining when it is reasonable to use a financial institution’s own resources to create or buy securities in the markets, which exposes the firm to risk factors. For example, the proprietary trading desk of an investment bank uses the firm’s own resources to buy and sell financial securities in an effort to increase revenues for that entity. Risk management may determine that it is not prudent for a bank to use its balance sheet to form, issue or purchase securities in the markets, in which case the proprietary desk may not participate.
Network security is another type of financial institution security for the technology systems within an organization. Financial institutions are privy to the personal information surrounding customers and the release of this data could be highly damaging to all parties involved. Next, companies need to install proper network security software programs designed to recognize any unscrupulous behavior. The security of this financial institution could include protection from a potential information breach, an Internet virus that could threaten a system, or even unwanted communications resulting from online spam.
Crimes against financial institutions can be white collar in nature and can be an attack on a company’s finances. There are third-party financial institution security firms that perform vetting actions, such as criminal background checks, on prospective partners leading to any formal business deal. These security firms may urge their former criminal investigator workforce to use the skills and procedures inherent in recognizing red flags throughout criminal defense in a manner that will similarly benefit a financial institution from investing in or partnering with a market operator with potentially fraudulent intentions.
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