According to data from the International Monetary Fund (IMF), financial institutions have lost $12 billion to cyberattacks over the past 20 years.
Among them, $2.5 billion was lost between 2020 and 2024, as per the newly released IMF April 2024 Global Financial Stability Report. The group has voiced worry that the increasing number of cyberattacks on financial institutions worldwide may undermine trust in the financial system and cause economic instability.
- “Financial firms have reported significant direct losses, totaling almost $12 billion since 2004 and $2.5 billion since 2020,” the IMF stated.
Banks as primary target
The body claims that because financial businesses handle a lot of sensitive data and transactions, they are frequently the target of criminals looking to steal money or interfere with the economy.
- “Attacks on financial firms account for nearly one-fifth of the total, of which banks are the most exposed. Incidents in the financial sector could threaten financial and economic stability if they erode confidence in the financial system, disrupt critical services, or cause spillovers to other institutions.
- Cyber incidents that disrupt critical services like payment networks could also severely affect economic activity. For example, a December attack at the Central Bank of Lesotho disrupted the national payment system, preventing transactions by domestic banks,” IMF stated.
- “Financial institutions in advanced economies, particularly in the United States, have been more exposed to cyber incidents than firms in emerging market and developing economies,” it added.
Citing JPMorgan Chase as an example, the IMF said the largest US bank recently reported experiencing 45 billion cyber events per day while spending $15 billion on technology every year and employing 62,000 technologists – many focused on cybersecurity.
It added that cyber incidents are a key operational risk that could threaten financial institutions’ operational resilience and adversely affect overall macrofinancial stability.
Why cyberattacks are rising
The IMF observed that a variety of reasons are involved in the increase in cyber incidents. It stated that they include the COVID-19 pandemic’s acceleration of the fast expanding digital connectivity as well as the rising reliance on technology and financial innovation.
The article went on to say that given the spike in cyberattacks following Russia’s invasion of Ukraine in February 2022, geopolitical tensions could also be a cause.
- “A cyber incident at a financial institution or a country’s critical infrastructure could generate macro-financial stability risks through three key channels: loss of confidence, lack of substitutes for the services rendered, and interconnectedness.
- “While cyber incidents thus far have not been systemic, ongoing rapid digital transformation and technological innovation such as artificial intelligence and heightened global geopolitical tensions exacerbate the risk.
- “Recent significant cyber incidents—such as the ransomware attack on the US arm of China’s largest bank, the Industrial and Commercial Bank of China, on November 8, 2023, which temporarily disrupted trades in the US Treasury market—further underscore that cyber incidents at major financial institutions could threaten financial stability,” it said.
What CBN need to do
To strengthen resilience in the financial sector, the IMF said central banks and authorities will need to develop an adequate national cybersecurity strategy accompanied by effective regulation and supervisory capacity that should encompass:
- Periodically assessing the cybersecurity landscape and identifying potential systemic risks from interconnectedness and concentrations, including from third-party service providers;
- Encouraging cyber “maturity” among financial sector firms, including board-level access to cybersecurity expertise, as supported by the chapter’s analysis which suggests that better cyber-related governance may reduce cyber risk.
- Improving cyber hygiene of firms—that is, their online security and system health (such as antimalware and multifactor authentication)—and training and awareness.
- Prioritizing data reporting and collection of cyber incidents, and sharing information among financial sector participants to enhance their collective preparedness.
Noting that attacks often emanate from outside a financial firm’s home country and proceeds can be routed across borders, the IMF said international cooperation has also become imperative to address cyber risk successfully.
