As the threats of cyber attacks on financial institutions keep rising, the International Monetary Fund (IMF) has advised on the urgent need for a better safeguards to counter the threats. The global lender in a blog expressed fears over the fate of banks and other critical platforms in the event that such an attack brings them down. According to IMF, “what will happen when an attack takes down a bank or other critical platform, locking users out of their accounts? “Tight financial and technological interconnections within the financial sector can facilitate the quick spread of attacks through the entire system, potentially causing widespread disruption and loss of confidence.
Cybersecurity is a clear a threat to financial stability.” It noted that among emerging market and developing economies, most financial supervisors were yet to introduce cybersecurity regulations or build resources to enforce them, according to a recent IMF survey of 51 countries. It said: “Fifty six per cent of the central banks or supervi-earsory authorities do not have a national cyber strategy for the financial sector. “Forty two per cent lack a dedicated cybersecurity or technology risk-management regulation, and 68 per cent lack a specialised risk unit as part of their supervision department.
“Sixty four per cent do not mandate testing and exercising cyber security measures or provide further guidance. Fifty four per cent lack a dedicated cyber incident reporting regime. Forty eight per cent do not have cybercrime regulations.” It went further to say that a Bank for International Settlements assessment of 29 jurisdictions identified shortcomings in the oversight of financial markets infrastructures. “There are, however, defenses against these risks, including preparation and concerted regulatory action, as we discussed at our recent global cybersecurity workshop in Washington. It won’t be easy though, and comprehensive and collective responses are urgently needed. “Just as rapid technological advances offer attackers tools that are cheaper and easier to use, so too do the changes give financial institutions greater ability to thwart them. “Even so, greater vulnerabilities are to be expected in an increasingly digitalised world. Targets proliferate as more systems and devices are connected. Fintech firms that rely heavily on new digital technologies can make the financial industry more efficient and inclusive, but also more vulnerable to cyber risks. “The escalation of geopolitical tensions has also intensified cyberattacks. Perpetrators and their motivation are often obscure, and the risks are not limited to regions of conflict. History shows that spill-over of disruptive malware can cause global damage. “For instance, the NotPetya malware attack that first swamped the IT systems of Ukrainian organisations in 2017 quickly spread to several other countries and caused damages estimated at more than $10 billion. “Finally, reliance on common service providers means attacks have a higher probability of having systemic implications. The concentration of risks for commonly used services, including cloud computing, managed security services, and network operators, could impact entire sectors. Losses can be high and become macro critical. “While financial firms and regulators are becoming more aware of, and prepared for, attacks, gaps in the prudential framework remain substantial,” IMF noted. In neutralising the threat, it advised that financial institutions and regulators must prepare for heightened cyber threats and potential successful breaches by prioritising five things.