Cyber Attacks are bringing in $100 billion in losses to financial institutions(FIs) says a survey conducted by International Monetary Fund(IMF). This is due to the fact that FI’s play a vital role in procuring and handling funds.
According to the IMF Staff Modeling Exercise report, hackers chose FI’s as easy targets due to the fact that they can spread the attack quickly through the interconnected financial system. And because most of the financial institutes still use legacy digital systems, their defense parameters prove almost defenseless against the current sophisticated attack standards conducted by cyber crooks.
In order to ascertain the risks, the IMF used techniques from actuarial science and operational risk measurement to calculate an estimate of the total losses from cyber attacks.
IMF study suggests that the average annual potential losses from cyber attacks could be nearly 9% of banks next income on a global note i.e around $100 billion. And in cases where the attacks were severe, the loss estimate could range from $270 billion to $350 billion. In rarest of the rare cases, the average potential loss could be as high as half of a bank’s net income, which could put the entire banking and financial sector in jeopardy.
Even the risk parameters seem to be high when the estimated losses are measured in proportion to the cyber insurance market gains. And as the premiums remain small on a global note i.e around $3 billion as of last year, the situation deteriorates as most of the financial institutions do not carry a cyber insurance cover.
The situation can only improve when the government starts collecting granular, consistent and complete data on the frequency and impact of cyber attacks. This info can then be used to asses the risks associated with the financial sector on the long run.
Furthermore, IMF suggests that an initial plan must be taken to strengthen the resilience of the digital infrastructure of the FI’s which helps in cutting down the odds of a successful attack and will facilitate a fast recovery.