The International Monetary Fund (IMF) has revealed a concerning statistic that 56% of Central Banks of 51 countries surveyed do not have a national strategy to prevent cyber attacks.
Also, the International Financial institution disclosed that 42 percent lack a dedicated cybersecurity or technology risk management regulation, and 68 percent lack a specialised risk unit as part of their supervision department.
This finding highlights a significant vulnerability within the global financial system, as cyber threats continue to escalate in frequency and sophistication.
In a blogpost titled “Mounting Cyber Threats Mean Financial Firms Urgently Need Better Safeguards”, the IMF explained that with the increasingly digitalized world, greater vulnerabilities are to be expected in financial institutions.
The IMF wrote,
“A Bank for International settlements assessment of 29 jurisdictions identified shortcomings in the oversight of financial markets infrastructures. There are, however, defenses against these risks, including preparation and concerted regulatory action, as we discussed at our recent global cybersecurity workshop in Washington. It won’t be easy though, and comprehensive and collective responses are urgently needed.
“Just as rapid technological advances offer attackers tools that are cheaper and easier to use, so too do the changes give financial institutions greater ability to thwart them. Even so, greater vulnerabilities are to be expected in an increasingly digitalized world. Targets proliferate as more systems and devices are connected. Fintech firms that rely heavily on new digital technologies can make the financial industry more efficient and inclusive, but also more vulnerable to cyber risks.”
The IMF further added that the escalation of geopolitical tensions has also intensified cyberattacks with the risks not limited to regions of conflict. The fund disclosed that reliance on common service providers means attacks have a higher probability of having systemic implications.
The IMF further posited five crucial steps Financial institutions and regulators need to prioritize to prepare for heightened cyber threats and potential successful breaches;
- Central banks, regulators, and financial firms must develop a cybersecurity strategy. Cyber risk is a multi-dimensional issue that requires sound security within authorities; robust oversight through regulation and supervision; collective action within the market; and efforts to build capacity and expertise.
- Financial regulators and firms need to shift their focus from classic business continuity and disaster recovery planning, to delivering critical services even when attacks disrupt normal operations.
- Financial supervisors need to ensure that cyber regulation and supervision can effectively promote resilience. There is no one-size-fits-all approach, but many elements are common.
- Financial firms must strengthen cyber “hygiene,” secure-by-design systems, and response and recovery strategies.
- The international community must harmonize cyber incident reporting and effective information sharing to ensure authorities around the world can manage incidents effectively.
In conclusion, the IMF’s findings serve as a critical wake-up call for central banks to prioritize the development and implementation of national cybersecurity strategies. Addressing these gaps is essential to safeguarding the integrity and stability of the global financial system in an increasingly digital world where cyber crimes has intensified.
