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Financial stability is at risk with increasing cyber threats
The frequency of cyberattacks has more than doubled since the pandemic. Although companies have historically suffered relatively modest direct losses from these attacks, some have experienced a much heavier toll.
Cyberattacks have more than doubled since the pandemic. While companies have historically suffered relatively modest direct losses from cyberattacks, some have experienced a much heavier toll.
US credit reporting agency Equifax, for example, paid more than $1 billion in penalties after a major data breach in 2017 that affected about 150 million consumers.
Key Takeaways
- Cyberattacks on financial firms have more than doubled since the pandemic, with extreme losses increasing to $2.5 billion and indirect losses such as reputational damage being substantially higher.
- Financial sector firms should prioritize developing effective cybersecurity strategies and regulations, as well as enhancing cyber hygiene and fostering international cooperation to address cyber risk successfully.
- To strengthen resilience in the financial sector, authorities should focus on periodically assessing the cybersecurity landscape, encouraging cyber maturity among firms, and prioritizing data reporting and information sharing among financial sector participants.
As we show in a chapter of the April 2024 Global Financial Stability Report, the risk of extreme losses from cyber incidents is increasing. Such losses could potentially cause funding problems for companies and even jeopardize their solvency. The size of these extreme losses has more than quadrupled since 2017 to $2.5 billion. And indirect losses like reputational damage or security upgrades are substantially higher.
The financial sector is uniquely exposed to cyber risk. Financial firms—given the large amounts of sensitive data and transactions they handle—are often targeted by criminals seeking to steal money or disrupt economic activity. Attacks on financial firms account for nearly one-fifth of the total, of which banks are the most exposed.
Incidents in the financial sector could threaten financial and economic stability if they erode confidence in the financial system, disrupt critical services, or cause spillovers to other institutions.
Source : Rising Cyber Threats Pose Serious Concerns for Financial Stability (imf.org)
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