Financial experts, banking officials, and security professionals are planning for potential cyberattacks that could significantly disrupt financial systems. They have been putting solutions in place for more than ten years, but recent major attacks against critical infrastructure have increased the risk.
Examples of nation-state cyberattacks include the one by Russia that took out part of the electric grid in Ukraine and the WannaCry worm that was linked to North Korea, which impacted the hospital and shipping industries. Information sharing groups have been formed by the federal government and various financial institutions to find solutions to these types of attacks before they hit.
Cyberattack Preparedness
Banks and other financial companies are significantly investing in cybersecurity. According to a New York Times article, JPMorgan Chase spends around $600 million annually on cybersecurity and has over 3,000 employees working in this area.
Understanding where the biggest potential is for cyberattacks is crucial. Experts report gaps in both awareness and preparation for a possible cyberattack on Wall Street.
Responding to the Possibility of Threats
Many financial institutions rehearse various responses to different cyberattack scenarios. These exercises give officials the confidence to deal with these major issues, but this alone isn’t enough.
Whereas first responders are given detailed simulations of disasters like hurricanes and forest fires, financial institutions do not simulate the actual duration or scale of destruction that a cyberattack would cause. Because of this, the financial and cybersecurity industries do not understand the full potential of such an attack.
While the financial industry may be able to withstand an attack on one large institution, the impact of attacks on multiple institutions could be disastrous. This type of disruption could possibly last for weeks.
This is especially worrisome should attackers strike during a volatile market period. One example would be on a “triple witching” Friday when stock options, index futures, and index options all expire the same day.
The Aftermath
Attackers are constantly working to find ways of stealing large amounts of money from banks and other financial institutions. In 2016, the central bank of Bangladesh was hacked. The hackers exploited vulnerabilities in SWIFT, the global financial system’s main electronic payment messaging system.
Their aim was to steal $1 billion. Most of the transactions were blocked, but they did manage to get their hands on $101 million. This was a wake-up call for the financial industry.
The risk is great, but there are unfortunately no clear solutions for avoiding such major attacks. The global financial system is experiencing a digital transformation. This trend is calling for the consideration of more modern payment systems and digital currencies. Banks and technology companies must work together to find the best ways of making this happen or will need to find another solution altogether.
Malicious actors are using this digital transformation to pose threats to the global financial system. This causes people to stop believing in the banking system, making it less financially stable.
As these trends continue, banks and financial institutions must find ways of protecting customers and their money. This means placing a stronger emphasis on cyberattacks than ever before so more concrete technology and solutions can be found.
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