Cybersecurity is failing at Finance Firms (Reports by IMF) - How to fight it?

Greater digitalization and heightened geopolitical tensions imply that the risk of a cyberattack with systemic consequences has risen.

Financial institutions have incurred losses of $12 billion due to cyber attacks over the past two decades, as revealed by a recent report from the International Monetary Fund (IMF).

The data indicates that the risk of cyber attacks is not diminishing and has prompted the IMF to advocate for increased international collaboration to safeguard the stability of the global financial system.

Since the onset of the pandemic, the number of cyber attack incidents has more than doubled, and the magnitude of significant losses has surged by over fourfold since 2017, reaching $2.5 billion. The report also highlights that indirect losses, such as damage to reputation and costs associated with security updates, are “significantly higher.”

The IMF warns that cyber-attacks pose an escalating threat to financial stability, given the substantial losses experienced by banks, asset managers, and insurers.

“Almost a fifth of all attacks target financial institutions, with banks being the most vulnerable,” stated Fabio Natalucci, Mahvash Qureshi, and Felix Suntheim, the authors of the study.

“While cyber incidents have not yet caused systemic issues, major events at prominent financial institutions can jeopardize macro-financial stability due to loss of trust, disruption of critical services, and the inherent technological and financial interconnections,” the IMF study authors emphasized.

The IMF further notes that banks in developed economies are more at risk compared to those in emerging economies.

For instance, JP Morgan, ranked as the world's largest bank by assets, reported facing up to 45 billion cyber threats daily and is investing $15 billion annually in technology to counteract cyber attack risks.

Therefore, the IMF is advocating for increased international cooperation to address the risks associated with cyber-attacks.

“Given the global impact and systemic repercussions of cyber attacks, international coordination is essential to mitigate cyber risks,” the report concludes.

Need for Cybersecurity Tools:

This further highlights the importance of cybersecurity tools for finance firms, given the increasing frequency and sophistication of cyber threats targeting the financial industry.

Here are some key reasons highlighting the significance of cybersecurity tools for finance firms:

1. Protection of Sensitive Data

2. Prevention of Financial Losses

3. Maintenance of Trust and Reputation

4. Compliance with Regulatory Requirements

5. Protection against Advanced Threats

6. Ensuring Business Continuity

7. Protection of Intellectual Property

8. Enhanced Detection and Response Capabilities

9. Secure Digital Transformation

10. Protection of the Supply Chain

However, using just any cybersecurity tool is not enough anymore. AI is dominating the tech sphere and it won't take much time to break past these security measures that are age-old.

Cybersecurity for the New Age

If AI is trending, let's see how helpful that can be for cybersecurity. Shall we?

AI-based cybersecurity tools offer several advantages over traditional tools, making them essential for finance firms:

1. Advanced Threat Detection:

- AI can analyze vast amounts of data to identify and respond to sophisticated cyber threats in real-time, enhancing the detection capabilities compared to traditional tools.

2. Predictive Analysis:

- AI can predict and anticipate potential cyber threats and vulnerabilities, enabling proactive measures and mitigation strategies, unlike traditional tools which are reactive.

3. Automated Response:

- AI-based tools can automatically respond to cyber threats, reducing response time and minimizing the impact of cyber attacks, whereas traditional tools often require manual intervention.

4. Adaptive Learning:

- AI can continuously learn and adapt to new and evolving cyber threats, improving the resilience and effectiveness of cybersecurity defenses, whereas traditional tools may become outdated and less effective over time.

5. Enhanced Efficiency and Productivity:

- AI-based tools can automate routine cybersecurity tasks and processes, freeing up valuable time and resources for finance firms to focus on strategic initiatives and innovation, unlike traditional tools which may require more manual effort and oversight.

In summary, AI-based cybersecurity tools offer advanced threat detection, predictive analysis, automated response capabilities, adaptive learning, and enhanced efficiency and productivity compared to traditional tools, making them indispensable for finance firms to effectively protect against and mitigate the increasing and evolving cyber threats in today’s digital landscape.