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LeadershipDecember 28, 20238 min read

CISO Requirements: In-House vs Virtual

Understanding the NY DFS CISO requirement and whether a virtual CISO is right for your organization.

Section 500.04 of NY DFS 23 NYCRR 500 requires covered entities to designate a qualified Chief Information Security Officer (CISO) responsible for overseeing and implementing the cybersecurity program. For many small businesses, hiring a full-time CISO isn't practical—but there are alternatives.

Limited Exemption Note

If your organization qualifies for the limited exemption under Section 500.19, you are exempt from the CISO requirement. However, you should still designate someone responsible for your cybersecurity program.

What Does Section 500.04 Require?

The CISO must:

  • Be qualified to oversee the cybersecurity program
  • Report at least annually to the board of directors or senior governing body
  • Assess the confidentiality, integrity, and availability of information systems
  • Report on the cybersecurity policies and procedures
  • Report on material cybersecurity risks and how they're being addressed

Option 1: In-House CISO

Hiring a full-time CISO provides dedicated security leadership but comes with significant costs.

Advantages

  • • Full-time dedicated attention
  • • Deep knowledge of your systems
  • • Immediate availability for incidents
  • • Direct integration with your team

Challenges

  • • High cost ($150K-$300K+ salary)
  • • Difficult to recruit qualified candidates
  • • May be underutilized in smaller organizations
  • • Single point of failure

Option 2: Virtual CISO (vCISO)

Section 500.04 explicitly allows the CISO to be "employed by an affiliate or third-party service provider." This opens the door to virtual CISO arrangements.

Advantages

  • • Fraction of the cost of full-time
  • • Access to experienced professionals
  • • Breadth of experience across industries
  • • Scalable based on your needs
  • • No recruitment or retention challenges

Considerations

  • • Not full-time on-site presence
  • • Shared attention with other clients
  • • Need clear communication protocols
  • • Must ensure proper access and authority

vCISO Requirements for DFS Compliance

For a vCISO arrangement to satisfy Section 500.04, ensure:

  • Qualified Individual: The vCISO should have relevant certifications (CISSP, CISM, etc.) and experience
  • Board Access: The vCISO must be able to report directly to your board or senior management
  • Documented Arrangement: Have a written agreement defining the vCISO's responsibilities
  • Adequate Time: Ensure sufficient hours are allocated for your organization's needs
  • System Access: The vCISO should have appropriate access to assess your security posture

What Should Your CISO Do?

Regardless of whether you have an in-house or virtual CISO, they should:

  1. Develop and maintain your cybersecurity policies
  2. Oversee the cybersecurity program implementation
  3. Conduct or coordinate risk assessments
  4. Manage incident response
  5. Coordinate vulnerability assessments and penetration testing
  6. Ensure adequate cybersecurity training
  7. Report to the board at least annually
  8. Support the annual certification process

Cost Comparison

Full-Time CISO

$150K-$300K+

per year + benefits

Part-Time In-House

$75K-$150K

per year

Virtual CISO

$9K-$36K

per year (typical)

Buffalo Sentinel vCISO Services

Our Virtual CISO service provides qualified security leadership at a fraction of the cost of a full-time hire. We offer tiered plans from advisory (4 hours/month) to full-service (20 hours/month), with board reporting, policy development, and incident response support included.

Need a Qualified CISO?

Our vCISO service satisfies NY DFS requirements at a fraction of the cost of a full-time hire.

View vCISO Pricing