Financial institutions have long been at the forefront of safeguarding sensitive data and ensuring consumer trust. The 23 NYCRR 500 regulation, also called the NYDFS Cybersecurity Regulation, has helped set new standards in cybersecurity by mandating rigorous measures to protect information systems against cyberattacks. Understanding and adhering to 23 NYCRR 500 is vital for organizations based in New York and those doing business in the state.
Below, we’ll review 23 NYCRR 500, unpack the recent critical updates, and provide actionable strategies to help you meet regulatory demands and strengthen your overall cybersecurity posture.
A brief review of 23 NYCRR 500
Here is a quick level-set on the relevant aspects of the 23 NYCRR 500 regulation ahead of reviewing the updated requirements and recommendations below.
The New York Codes, Rules, and Regulations (NYCRR) is a comprehensive set of guidelines established by various state agencies in New York, covering a wide range of areas, including health, education, and finance, to ensure compliance with state laws. Within this framework, the New York State Department of Financial Services (NYDFS) oversees financial services and products, regulating entities such as banks, insurance companies, and mortgage brokers to promote safety, soundness, and consumer protection.
23 NYCRR 500 (Title 23, Part 500) is a cybersecurity regulation established by NYDFS in March 2017, mandating that financial services companies in New York implement strong cybersecurity programs to protect sensitive data and information systems from cyberthreats.
The 23 NYCRR 500 regulation requires covered entities—anyone operating with a license, registration, accreditation, or other similar authorization overseen by New York’s Banking Law, Financial Services Law, or Insurance Law—to develop comprehensive cybersecurity policies, conduct regular risk assessments, and establish incident response plans, among other measures. Although primarily targeting financial institutions, the regulation’s rigorous standards set a benchmark influencing cybersecurity practices beyond the state of New York.
Now, let’s review some of the most notable updated requirements in 23 NYCRR 500 including deadlines in 2024 and 2025.
Updated requirements and deadlines you need to know
The NYDFS amended 23 NYCRR 500 to address the increasing sophistication of cyberthreats. Below is a partial list of the updated requirements and their respective deadlines (requirements take effect in various phases). This is not an exhaustive list and you can find more details here.
* NYDFS defines a “Class A” Company as a covered entity with at least $20 million in gross annual revenue from business operations in New York and either (1) more than 2,000 employees in total; or (2) over $1 billion in gross annual revenue from business operations in all states.
Top recommendations and strategies for 23 NYCRR 500
So, what can you do about existing and upcoming requirements? To support compliance with 23 NYCRR 500 and strengthen your cybersecurity programs, consider the following tactical initiatives and recommendations.
1. Conduct a comprehensive gap analysis
Perform a thorough assessment of how your cybersecurity posture aligns with 23 NYCRR 500.
Actions you can take:
- Evaluate current policies—Review existing cybersecurity policies and procedures to identify gaps relative to the updated regulation.
- Identify deficiencies—Pinpoint areas where current practices fall short of the new requirements.
- Develop a remediation plan—Create a detailed plan to address identified deficiencies, including timelines and responsible parties.
2. Enhance cyber risk management practices
Strengthen risk assessment processes to better identify, evaluate, and mitigate cyber risks.
Actions you can take:
- Regular risk assessments—Conduct frequent and detailed enterprise-wide risk assessments.
- Threat landscape analysis—Continuously monitor and analyze the evolving cyberthreat landscape to adjust risk management strategies accordingly.
- Risk mitigation strategies—Implement appropriate risk mitigation strategies based on assessment findings.
3. Implement and enforce multi-factor authentication
Ensure strong access controls through the expanded use of multi-factor authentication (MFA).
Actions you can take:
- MFA implementation—Deploy MFA across all critical systems and sensitive data access points wherever technically feasible.
- User education—Train employees on the importance and use of MFA to ensure smooth adoption at tool roll-out and as part of annual awareness training.
4. Develop and test incident response plans
Establish and regularly test comprehensive incident response practices to ensure preparedness for cybersecurity events.
Actions you can take:
- Create incident response plans—Develop detailed incident response plans that outline steps for detecting, responding to, and recovering from security incidents.
- Simulations and tabletop exercises—Conduct regular simulations and tabletop exercises to test the effectiveness of response plans and procedures.
- Continuous improvement—Use insights from exercises and actual incidents to refine and improve incident response plans.
5. Strengthen third-party risk management
Ensure that third-party service providers adhere to high cybersecurity standards.
Actions you can take:
- Vendor risk assessments—Conduct thorough risk assessments of third-party vendors before engagement and periodically afterward.
- Contractual obligations—Include stringent cybersecurity requirements in contracts with third-party providers.
- Continuous monitoring—Implement continuous monitoring of third-party cybersecurity practices to ensure ongoing compliance.
6. Enhance data protection measures
Improve data protection practices, focusing on encryption and secure data disposal.
Actions you can take:
- Encryption standards—Adopt and enforce strong encryption standards for data in transit and at rest.
- Data retention policies—Develop and implement policies for the secure retention and disposal of nonpublic information.
- Regular audits—Conduct regular audits to ensure compliance with data protection policies and identify areas for improvement.
7. Promote a culture of cybersecurity awareness
Foster a culture of cybersecurity awareness across the organization.
Actions you can take:
- Employee training programs—Implement mandatory, ongoing cybersecurity training for all employees.
- Phishing simulations—Conduct regular phishing simulations to educate employees on recognizing and responding to phishing attacks.
- Awareness campaigns—Run cybersecurity awareness campaigns to keep cybersecurity top-of-mind for all staff members.
8. Ensure board involvement and governance
Engage the board of directors in cybersecurity oversight and governance.
Actions you can take:
- Board education—Educate board members on cybersecurity risks and the importance of strong cybersecurity practices.
- Regular updates—Provide regular updates to the board on cybersecurity risks, incidents, and program effectiveness.
- Policy approval—Ensure that the board reviews and approves all major cybersecurity policies and initiatives.
9. Maintain detailed reporting and documentation
Ensure detailed and timely reporting of cybersecurity events as required by 23 NYCRR 500.
Actions you can take:
- Incident reporting protocols—Establish clear protocols for reporting cybersecurity incidents to the NYDFS within 72 hours of discovery.
- Ongoing updates—Provide ongoing updates on the status of cybersecurity incidents and mitigation efforts.
- Documentation—Maintain comprehensive documentation of all cybersecurity policies, procedures, assessments, and incidents.
Adhere and advance your security posture
Adhering to 23 NYCRR 500 presents a valuable opportunity to elevate your cybersecurity posture, protect sensitive data, and foster consumer confidence. By embracing the regulation's requirements and implementing the recommended actions, you can effectively meet compliance standards, build a strong defense against evolving cyberthreats, and ensure the confidentiality, integrity, and availability of critical information assets.
Compliance with 23 NYCRR 500 is not just a regulatory obligation but a strategic move towards a more secure and resilient digital future—and it’s not a journey you have to take alone. Learn how partnering with NuHarbor Security experts can support and simplify your path to 23 NYCRR 500 compliance.
How we can help you strengthen security
Navigating the complexities of the 23 NYCRR 500 regulations can be daunting, but it doesn’t have to be. At NuHarbor Security, we specialize in helping clients implement the recommendations and actionable strategies outlined above.
The critical first steps in this journey are to conduct a comprehensive gap analysis and perform a thorough assessment of your current cybersecurity posture to see how it aligns with 23 NYCRR 500 requirements.
After, conducting a NYCRR-focused gap assessment (or in conjunction with it), we also strongly recommend an enterprise-wide risk assessment. Our methodology, modeled after NIST 800-30 (Guide for Conducting Risk Assessments) will help you understand the threats you face and increase the likelihood that all of the in-place controls, and not just those that support NYCRR, are adequate to ensure residual risk values are tolerable and manageable.
Risk and security control (gap) assessments are always intertwined and are rarely meaningful without the other. Both assessments are critical to managing risk throughout the entirety of your organization and are unquestionably a key component of informing your daily business decisions. Learn more now.
Resources
Are you interested in learning more about 23 NYCRR 500? Here are a few related resources.
New York Codes, Rules, and Regulations (NYCRR)
New York Department of Financial Services (NYDFS)
23 NYCRR 500 Regulation
23 NYCRR 500 Program Template
23 NYCRR 500 Training Presentation
NYDFS Cybersecurity Resources Center and Training Materials
23 NYCRR 500 Compliance Assessment or Advisory Services
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