Cyber Attacks On Banks Could Trigger Financial Crisis

The head of the European Central Bank (ECB) has warned that a combined cyber-attack on important banks could trigger financial crisis and instability.

The financial system has so far weathered larger-scale cyber-attacks, but some now argue that the system has not been properly tested for a systemic cyber-attack. As the connection between cyberspace and the real economy intensifies, amid widely expected further increases in interdependency, interconnectivity, and complexity, the probability that an external shock will affect the financial system and become a systemic event increases.

Christine Lagarde (pictured), the ECB’s president, said that a report by the European Systemic Risk Board (ESRB) estimates the global cost of cyber-attacks at between $45bn and $654bn. “As an operator of critical infrastructures, the ECB obviously takes such threats very seriously,” she said earlier this moneth, adding that there are several “plausible channels” through which a cyber-attack could morph into a serious financial crisis. One such channel might be an operational outage that destroyed or encrypted the balance accounts of a major financial institution could trigger a liquidity crisis. 

The report by the ESRB, which was set up by the European Commission, will look how a cyber incident could, under certain circumstances, rapidly escalate from an operational outage to a liquidity crisis.

It will say that in common with historical financial crises this liquidity crisis could, in certain circumstances, lead to a systemic crisis. At its most recent board meeting the ESRB revealed that it had identified cyber warfare as a source of risk to the financial system.

Last year, the G7 announced a joint cross-border crisis management exercise on a cyber incident affecting the financial system that it carried out in June 2019, saying that cyber risks were increasing and posed a “genuine and growing threat” to the stability and integrity of the financial sector. It was the first exercise of its kind to be organised by finance ministries, central banks, regulators and financial market authorities. It did not reveal the results but the G7 asked its Cyber Experts Group to review financial regulation, and to look at whether the impacts could be measured better. The Trump administration is expected to take up the issue when it assumes the G7 presidency this year.

In her speech, the ECB’s president also said it needed to look the risks and opportunities of issuing central bank digital currencies to respond to changing consumer demand and to strengthen Europe’s place in the world.

Last month, the Bank of England announced it would work with the ECB and the central banks of Canada, Japan, Sweden and Switzerland to share experiences as they assess the potential cases for central bank digital currency (CBDC). Central banks have accelerated their work on digital currencies after Facebook unveiled plans to introduce its Libra cryptocurrency and China said it was developing a digital currency.

Jake Moore, cybersecurity expert at ESET, said: “The recent Travelex ransomware attack highlighted the ease at which taking out one organisation can, in fact, knock on into other companies. “There will always be a cyber-risk posed to the financial industry due to the vast amounts at stake, but this risk is managed to the highest capacity." he said.  

"When companies work together to build more robust defenses we see the potential risk lowered and the best outcomes." 
 

Carnegie Endowment:       ECB Europa:       InfoSecurity Magazine:          Independent:       Image: WEF 

You Might Also Read:

Online Bank Fraud Is Up 40% In The UK:

Bank of England Testing Banks' Cyber Resilience:

 

 

 

« Cyber Incidents Jump Up The Risk Index
It Was The Chinese Army That Hacked Equifax »

CyberSecurity Jobsite
Perimeter 81

Directory of Suppliers

CSI Consulting Services

CSI Consulting Services

Get Advice From The Experts: * Training * Penetration Testing * Data Governance * GDPR Compliance. Connecting you to the best in the business.

Jooble

Jooble

Jooble is a job search aggregator operating in 71 countries worldwide. We simplify the job search process by displaying active job ads from major job boards and career sites across the internet.

Practice Labs

Practice Labs

Practice Labs is an IT competency hub, where live-lab environments give access to real equipment for hands-on practice of essential cybersecurity skills.

DigitalStakeout

DigitalStakeout

DigitalStakeout enables cyber security professionals to reduce cyber risk to their organization with proactive security solutions, providing immediate improvement in security posture and ROI.

Clayden Law

Clayden Law

Clayden Law are experts in information technology, data privacy and cybersecurity law.

The Josef Group (TJG)

The Josef Group (TJG)

The Josef Group Inc. is a certified woman-owned permanent staffing agency specializing in Information Technology, Engineering, and US Government "cleared" IT candidates.

British Insurance Brokers’ Association (BIBA)

British Insurance Brokers’ Association (BIBA)

BIBA is the UK’s leading general insurance intermediary organisation. Use the ‘Find Insurance‘ section of the BIBA website to find providers of cyber risk insurance in the UK.

A-SIT Secure Information Technology Center

A-SIT Secure Information Technology Center

A-SIT was founded in 1999 as a registered nonprofit association and is established as a competence center for IT-Security.

PCI Compliance Guide

PCI Compliance Guide

The PCI Compliance Guide is one of the leading educational websites available focused exclusively on PCI compliance.

National Institute of Information and Communications Technology (NICT)

National Institute of Information and Communications Technology (NICT)

NICT is Japan’s sole National Research and Development Agency specializing in the field of information and communications technology.

Matias Consulting Group (MCG)

Matias Consulting Group (MCG)

Your Business needs competitive and resilient ICT solutions. MCG defines, deploy & support them enabling you to focus on your core business.

Intuity

Intuity

The Intuity suite of services provides companies with a complete awareness of their security status and helps them in an efficient, efficient and sustainable improvement process.

Sanderson

Sanderson

Sanderson is a recruitment company providing expert recruitment services in areas including Cyber & Information Security.

Secure-CAV Consortium

Secure-CAV Consortium

Secure-CAV is a technology-led consortium funded by Innovate UK to drive the development of cybersecurity solutions for connected and autonomous vehicles.

AppOmni

AppOmni

AppOmni is the only SaaS CSPM solution that gives teams all the tools they need to be successful – from security posture management to monitoring and detection to continuous compliance.

NetApp Excellerator

NetApp Excellerator

NetApp Excellerator is NetApp’s global start-up program that aims to fuel innovation by partnering with deep-tech start-ups.

Netlinkz

Netlinkz

Netlinkz has developed the Virtual Secure Network (VSN) overlay technology platform, a breakthrough in connectivity security, speed, and simplicity.

ShardSecure

ShardSecure

ShardSecure Microshard technology eliminates data sensitivity, providing security, privacy and compliance beyond encryption.

Baxter Clewis Consulting

Baxter Clewis Consulting

Baxter Clewis are cyber security and compliance experts. We provide Security Consulting, IT Assurance, and Technical Security services.

Wickr

Wickr

Wickr's mission is to secure the world's most critical communications. Wickr provides the highest standard of encryption trusted by millions worldwide.

Telesystem

Telesystem

Telesystem empowers businesses across the USA with a range of innovative network, communication and collaboration solutions.