Cybersecurity is becoming a top priority for financial institutions as cyber attacks continue to increase. Many financial institutions are subject to advanced persistent threats (APTs) designed to obtain unauthorized access to a computer network and remain undetected for extended periods. APS poses a great risk to financial institutions as they can steal sensitive financial information.
Human error
The financial services cybersecurity industry is most vulnerable to breaches, and human error is a major contributor. Employees are distracted and stressed, which can lead to errors. Fortunately, financial services businesses can mitigate the impact of human error by using encryption to protect email communication. Encryption provides peace of mind for employees and streamlines workflows. It also allows important documents to be shared with colleagues and clients without fear of being intercepted.
There are various types of human error, the most common being opportunity and lack of awareness. Despite a person’s best efforts, they will occasionally make a mistake. The more opportunities someone has to make a mistake, the higher the chance that something will go wrong. Many environmental factors increase the chances of errors.
Intentional attacks
Intentional attacks on financial services could affect a country’s economy. If such an attack disrupts the financial system, it could lead to a loss of confidence, a fire sale of assets, and a disruption of payment flows. The consequences of an attack on financial services could also have a ripple effect on other financial systems.
In recent years, targeted attacks on financial services firms have become increasingly common. These attacks can use sophisticated cyber technologies to disrupt or compromise critical infrastructure. For example, recent cases have involved extortion attempts and ransomware. These attacks can affect public health, economic security, and national security. In addition to disrupting customer services, they can cause a firm’s reputation to suffer.
Fintech’s impact on financial stability
The use of fintech in the financial sector creates both opportunities and risks. Fintech companies offering core banking functions have the potential to improve financial stability by increasing the diversification of credit and liquidity risks and reducing concentration risk. However, fintech companies may also introduce new risks through unbundling financial services.
The FSB is monitoring FinTech developments globally and assessing the impact on financial stability. It has created a framework for fintech impact assessment and published a white paper that explores the impact of these innovations. Although these technological innovations are expected to improve the client experience, they can also create new challenges, pose cybersecurity risks, and exacerbate existing risks.
The book makes a strong case for a precautionary approach to fintech regulation. It warns that systemic risks can lead to a financial crisis that may have irreversible consequences. It also suggests new forms of disclosure and supervision and new licensing regimes for financial technologies. Further, it places the discussion of fintech within the context of broader economic issues.
Internal disclosure system
There have been numerous proposals to strengthen the internal disclosure system for cybersecurity and financial services. The SEC has made cybersecurity a key focus of its recent guidance. The new SEC rules would require companies to develop and assess their cybersecurity disclosure controls. The proposed rules would also require firms to design their disclosure systems to provide reasonable assurance that they can respond to cybersecurity incidents. However, there have been some challenges to implementing the proposed rules.
The proposed rule does not include exemptions for smaller firms or phase-in periods for foreign private issuers.
