Addressing Cyber Risks in the Financial Services Sector admin 01.07.2022

Addressing Cyber Risks in the Financial Services Sector

Cybersecurity is an integral facet of wealth management in the 21st century. Leaders in the financial industry recognize the importance of having a comprehensive approach to cybersecurity. With the evolution in technology, leaders need to reevaluate security approaches in the cybersecurity segment to protect against modern threats. Despite the efforts made by the financial industry to establish a comprehensive secure framework, the industry remains a leading target for malicious actors worldwide.

The development of newer technologies, including blockchain and decentralized finance, is driving the industry to explore advanced security solutions. Other critical areas include user privacy, data management, and response management to crisis events in the industry. Regulatory scrutiny is also intensifying efforts on improving the response framework to handle challenges like ransomware and form unified breach reporting protocols.

Cybersecurity experts in the corporate sector need to explore viable threat management protocols to deliver the appropriate responses to incoming threats. In the current landscape, the industry needs to explore viable responses to acting threats to protect critical data and infrastructure. The industry is introducing radical steps, including zero-trust access and trust-by-design to evaluate risk and track security progress.

Cybersecurity Landscape After the Covid 19 Pandemic

With a widespread digital shift in the global corporate sector, cybersecurity threats to the industry have also subsequently intensified in the past few years. Evaluation by DIF’s researchers explored that over 85% of corporate directors expressed the possibility of data breaches being a significant part of the company’s cybersecurity policy. Other directors expressed confidence in their organization’s ability to respond to potential threats in the digital space.

Due to increasing regulatory scrutiny, leaders in key business spaces have started to empower cybersecurity leaders with the required tools and resources to protect digital infrastructure and establish improved privacy and data management practices. Boards at leading banks, insurance companies, and wealth managers are starting to recognize the importance of innovative security management as technology rapidly evolves in the industry.

Cyber Risks in the Financial Services Sector

Existing Cyber Security Landscape

The global corporate segment is currently facing increasing security challenges due to higher activity by malicious actors. The state of the cybersecurity segment can be effectively evaluated by exploring the following factors.

  • Over 59% of financial companies experienced a major breach in the past year.
  • In 2020, the average cost per data breach for corporations was $3.8 million. This cost is expected to significantly elevate as the value of data and digital infrastructure increases in the coming years.
  • According to Blackrock, over $10 Trillion in cybercrime-related damages is expected to impact the global financial sector by 2025.
  • It takes companies an average of 6 months to detect existing breaches in their digital infrastructure.

The current landscape and the projected trajectory of the cyberspace segment require proactive approaches by stakeholders to protect the integrity of critical systems. The most critical element in the security directives is currently in the breach detection period. Companies need to ramp up their monitoring and detection apparatus to ensure that potential breaches are actively identified with a comprehensive response delivery mechanism.

Corporate leaders can clearly explore the fiscal value of effective security solutions. The increasing sophistication of attacks is a key threat to the risk management of cyber assets. DIF’s research projects sophisticated attacks as the most critical factor in digital asset protection. The shift to newer technologies will subsequently require companies to enhance digital security at broader levels. Leading stakeholders like JPMorgan and Chase have been spending over $600 million yearly to combat acting cybersecurity threats to the company.

Regulatory Changes in the Cybersecurity Segment

Organizations need to prepare themselves for a transformed approach to security management. Backed by the US government and Federal Reserve, changes are expected to drive increased accountability to mitigate cyber risk and implement stronger privacy requirements. Regulators are also focused on delivering effective solutions that utilize CISOs to deliver comprehensive security solutions.

 

Cyber Risks in the Financial Services Sector

Empowering Cybersecurity Teams and Information Leaders

Additionally, board members expressed the requirement to improve cybersecurity management by empowering information security leaders. The role of information leaders in companies is transitioning from security guards to broader advisors that are helping companies optimize their broader cybersecurity approach. The current landscape in the cybersecurity industry has showcased a negative trend in the management of Chief Information Security Officers (CISOs). The average tenure for the officials has been an average of 22 months. This time period reflects the challenge of communicating requirements and figuring out the optimal route to manage cybersecurity modernization.

For CISOs to effectively impact security management, their role must be incorporated on an initial stage with development and innovation teams to implement the required security principles. Effective CISOs can navigate the requirements of the business and technology segments simultaneously to deliver the optimal balance.

Expanded Cyberreporting For Company

The majority of corporate boards expressed the need to be further informed on active cyber threats. According to an evaluation by the DIF team, only 30% of corporate board members in leading organizations are currently satisfied by the standards of cyber reporting in place across the organization’s digital infrastructure. Additionally, board members expressed the requirement to improve cybersecurity reporting as a central organizational priority.

When it comes to corporate reporting, companies need to define trackable metrics and deliver them on a regular basis to ensure that effective security evaluation can be established. It is essential to utilize multiple risk evaluation techniques to explore exposure and manage through targeted investment directives.

Cyber Risks in the Financial Services Sector

Conclusion – Curating A Digital Future

As organizations come to terms with a comprehensively digital future, leaders need to prioritize cybersecurity as an integral element of business operations. Shifting to dedicated CISOs will allow companies to develop broader strategies to approach cybersecurity. DIF also recommends security teams amplify monitoring efforts to ensure that potential breaches are actively detected along with viable responses.

Cyber reporting infrastructure also needs to be developed with a top-down approach to convey active events to company leadership on a regular basis. Having advanced insight will allow leadership to optimize strategies and deliver improved responses to potential situations.

References

https://fintechmagazine.com/crypto/what-does-finance-cybersecurity-look-2021

https://www.jpmorgan.com/solutions/treasury-payments/insights/staying-focused-on-cyber-security-and-fraud-prevention

https://www.secureworld.io/industry-news/jpmorgan-chase-cybersecurity-budget

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