At pole position, is Cyber-security...

Around this time last year, the Financial Stability Oversight Council (FSOC) published its Annual Report for the year 2018, highlighting this years developments in the financial markets and regulation, emerging threats, and recommendations to promote U.S. financial stability.

Looking at the report last year, one may have thought it unusual to have a technical topic like Cyber-security to be mentioned as a recommendation ahead of reference rates (LIBOR), Risk management at CCPs, and Capital, Liquidity & Resolution.

As one takes a look back at the year 2019, it would seem that the prioritization of Cyber-security as the first in recommendations in the report last year, has merit. Here are three reasons, that comes to mind. There could be more, which you are welcome to add...

• Security Incidents

You can see a timeline of the security incidents in here at carnegieendowment.org below. There has been continuous announcements of Cyber-security incidents, the biggest of them being the Capital One data breach. The incident is worrying because a) the incident was brought out to light by the carelessness of the attacker than by any proactive monitoring b) the attack was done by a once-insider at AWS who exploited a loophole that existed in the technology c) The sheer amount of data that was atleast temporarily compromised

• Open Banking

Open Banking initiatives that are an integral part of the banking transformation that is taking place across the globe and is based on the development and deployment of Application Programming Interfaces (APIs) that enable third-parties like fintechs to build value-added applications and services, on top of it. Cyber attacks on APIs would be a central concern as banks start exposing their customer data APIs to third-party applications.

• Cloud Adoption

Over the past few years, the adoption of cloud by financial services has accelerated, and now, with even regulators finding it comfortable to host confidential data on the cloud, it will only gain further momentum. According to the McAfee 2019 Cloud Adoption and Risk Report, 21 percent of all files in the cloud contain sensitive data and sharing of sensitive data in the cloud has increased by more than 50 percent.

While I was putting these thoughts together, the report of 2019 is now published. Given how 2019 went by, I wasn't surprised that, Cyber-security continues to retain the pole position.

Welcome your comments, thoughts...