By Charles Abuede
The International Monetary Fund (IMF), in a new report just released, says it has found that cyber risk has now become the new threat to financial stability and the financial industry at large globally.
According to the international financial institution, invaders target large and small institutions, rich and poor countries, functioning without borders. However, combating cybercrime and reducing the risk must be a shared responsibility across and inside countries globally.
With the increasing reliant on digital financial services across the globe, the number of cyberattacks has tripled over the decade, thus making it a threat to the financial stability of economies globally, the IMF report said. Notwithstanding the sturdy financial and technological interconnections, a successful attack on a major financial institution, or on a core service used by many could quickly stretch through the entire financial system causing widespread disruption and loss of confidence in the system, it further stated.
Despite the fact that the daily foundational risk management work of maintaining networks, updating software and enforcing strong ‘cyber hygiene’ has remained with financial institutions, there is also a call to address universal challenges and identify the spill overs and interconnections across the financial system.
The report also noted that with hacking tools now becoming cheaper, simpler and more powerful, it paves way for lower-skilled hackers to do more damage at a fraction of the previous cost, adding that the expansion of mobile-based services has also increased the opportunities for hackers.
Managing cyberattacks amid weak coordination
The report by the multilateral lender suggests some strategies that would strengthen cybersecurity and improved financial stability globally through its adoption.
According to the IMF, there is a need for cyber planning and risk measurement. It stated that the global monetary framework’s interdependencies can be better understood by planning key operational and mechanical interconnections and critical infrastructure
The IMF notes, however, that better consolidating digital risk into financial security examination will improve the capacity to comprehend and moderate system-wide threats.
According to the report, national authorities will need to cooperate on the usage of converging regulations for more grounded cross-border collaborations. “Thus, the Financial Stability Board, Committee on Payments and Market Infrastructure, and Basel Committee, have already started to reinforce coordination and encourage convergence globally,” it stated.
As cyberattacks become progressively normal, the financial system must have the capacity to respond and resume activities immediately despite a successful attack, safeguarding stability, and advised that global plans are important to facilitate response and recuperation in cross-border institutions and services.
“Central banks chiefs need to create data sharing practices that work successfully inside these imperatives. Similarly, a globally agreed format for information sharing, increased use of regular data platforms and improvement of trusted networks could all reduce barriers,” the report further suggested.
The international financial institution further asserts that since hackers know no fringes, global crimes require the global implementation of laws. Thus, cyberattacks should turn out to be more expensive and riskier through effective measures to confiscate crime proceeds and prosecute criminals, as this requires solid co-operation between law enforcement agencies and national authorities responsible for critical infrastructure or security, across countries and agencies, said the report.
It also highlighted that the aiding of developing and emerging economies to build cybersecurity capacity will go a long way in solidifying financial stability as well as supporting financial inclusion. However, it noted, low-income economies are at risk to cyberattacks particularly; thus, harnessing innovation securely and safely will keep on being fundamental to the improvement and with it, there is a need to ensure that cyber risk is addressed.