Cyber Security – The Threat to the Finance Industry
Cyber security threats are not a new concern in the finance industry but they have grown in recent years.
This growth has led to policy changes from the Financial Conduct Authority (FCA) which mean that banks have to disclose details of operational and security incidents that they face.
This has been a challenge for financial institutions as it has opened them up to the potential of reputational damage. However, it had also presented them with the opportunity to prove that they treat cyber security seriously and are concerned about protecting private data belonging to their customers.
The increase in cyber attacks
In order to understand the challenges and opportunities that cyber attacks present to financial institutions, it’s important to be aware of just how prevalent cyber security issues are.
The fact is that there have been a significant number of high profile data breaches in recent years. These beaches can be paralysing to an organisation.
In the financial services industry, there was a five-fold increase in cyber attacks between 2017 and 2018, and the problem is at the forefront of concerns for any boardroom.
Why finance professionals need to guard against risk
The cyber threat is an obvious one, but this does not necessarily make it any easier to deal with. The threat from cyber attack is constantly changing and evolving.
This means that professionals such as CFOs and finance directors need to be proactive in their approach to cyber security threats. They need to take time to recognise threats and potential weaknesses. This means employing the necessary infrastructure and processes.
This ongoing fight is a complex and testing one. According to figures from UK Finance, financial institutions prevented £705.7 million worth of cyber fraud during the first half of 2018. However, they also lost £503 million to fraudsters. The figures suggest that around one in three cyber attacks are successful. This shows just how vital it is for finance directors and CFOs to have their finger on the pulse when it comes to cyber security.
Any organisation can fall prey to cyber fraud. Even major companies like Facebook, Microsoft and Cisco have been the victim of cyber attack techniques that are becoming more sophisticated all the time. Systems that are vulnerable and unpatched leave organisations vulnerable to attack. For this reason, the mitigation of risk is essential. Finance professionals need to ensure that their internal processes and infrastructure are regularly monitored and protected against potential attacks.
The risk from outside the organisation
It’s not just internally that organisations within the finance industry are vulnerable to cyber attack. Many organisations rely on external vendors to provide some of their services. If these external vendors do not pay strict attention to cyber security practices, they can represent a significant risk.
This is a major concern in the finance industry where 72% of UK financial services firms suffered a data breach in 2017-18 but less than half of them knew whether third-party access was to blame. Finance professionals must consider this risk alongside internal considerations.
Cyber security has to be high on the agenda for any finance industry boardroom. Given the increasingly commercial role that finance directors now play, this means that they need to be proactive in their involvement with protecting the cyber security of their organisation.
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Date Posted: January 10th 2020
Posted By: Phil Scott