The risks of poor cyber security in finance

Financial institutions, such as banks, have large amounts of people’s personal information. This makes them a target for cyber criminals because they quickly infiltrate organisational systems. This data must be preserved at all costs to reduce customer incongruence that is limited by this approach. It is also a necessity for stability in the financial system of that country or region.

The most popular choice for these attacks is the financial industry, with 21% of all cyber attacks taking place within that sector. Globally, the global mean cost of a breach was established to be standing at 4.45 US Billion in the year 2023 and it was found that there was an average increase of 15 % over the previous three years. Examples of spectacular events and cases illustrate the subject and demonstrate the consequences of insufficient protection. The biggest cyber attack was in Bangladesh Bank in 2016 when $81 million were hacked.

Now, let’s discuss some threats of low cyber security in finance. We will also look at how these threats can be mitigated.

The vulnerability of financial data

All types of financial information are worth stealing by hackers, be it the customer information, account details, transaction history or investment profile. This data can be monetised in the following ways: either by identity theft, fraudulent transactions, or sometimes through the sale of information through the Dark Web.

Common attack vectors used to target this sensitive data include:

Phishing: A phishing message or website pretending to be an entity or a person that the recipient would give their credential or any detail to.
Malware: Malware software that is primarily designed to spy on computers / networks, to steal information from them, or to terminate them.
Ransomware: A type of virus that aims at encrypting the data and only decrypting them once the owner pays.

According to the study done by IBM, the average cost for a data breach in financial industry in the year 2023 was $ 5.9 million, which was more than other industrial sectors. Still, one must mention that data breaches are expensive, and they are even more so in the financial sector.

Further, Verizon mentions that in the 2022 year 82% of the breaches relate to the human factor, such as phishing, using stolen logins, abuse of data, or an accidental occurrence.

Regulatory compliance risks

There are regulations that govern the use of data that is deemed very important to the financial position of a nation in the financial industry. In addition, some rules like the GDPR, the PCI DSS, and concrete national or regional laws preside over some aspects of cyber security.

Non-compliance with these regulations can result in severe consequences, including:

Hefty fines: For example, GDPR allows fines of a maximum € 20 million or 4% of the total world wide turnover of the preceding fiscal year, if anyone is higher.
Legal action: Failure to meet the compliance within the institutions can lead to bodies which have been impacted by the actions of the affected institutions suing the institutions.
Reputational damage: A breach of data or failure to meet standards and responsibilities that are prescribed by regulations can be disastrous to an organisation and may represent a loss of its face in the market generally, among other consequences.

Deloitte’s report found that more than half of the financial institutions said they had committed a regulatory compliance violation in the past year. It also demonstrates the difficulties encountered in achieving compliance in these evolving financial institutions.

Impact on business operations

Cyber attacks can have a devastating impact on business operations, leading to:

Lengthy downtimes: This state demonstrates the susceptibility of different important systems and services to cyber attacks and disruptions that threaten business operations.
Lost revenue: Even short-term inactivity or interruptions in business are relatively expensive in terms of revenue in operating terms.
Costly recovery processes: The processes of data recovery, system replacement and improvement of security require often overwhelmingly steep prices, and we spend in abundance of time all the time.

Another Ponemon Institute survey pointed that data centre costs at least $9,000 per minute of downtime. This is an unenviable position for any business; however, the very nature of the financial business makes it very vulnerable to these interruptions.

Social engineering and insider threats

They are not only external threats in the field of cyber security. Social engineering approaches emphasise on the activities of the personnel required in a leakage of sensitive data.

Examples include:

Phishing emails targeting employees: These can appear to be a message from the company’s information technology department, employees bank, or any other real and reasonable organisation that has decided to shut down the employee's computer due to spyware or other damaging virus.
Pretexting: Cyber terrorists create a scene that forces employees to give out information.

Employees also always pose the biggest threat when knowingly or unwittingly do harm intentionally or otherwise. Unhappy employees in an organisation who have grudges or whose desires are not met in an organisation or who have improper ‘free reign’ over the computer system of an organisation are capable of deliberately or in some cases, inadvertently passing information.

As discovered in a Proofpoint report, about 83% of businesses and organisations experienced one or more successful phishing attacks in the year, 2021. This brings us to the conclusion that the services of employee training and awareness are still vital for preventing social engineering threats.

Mitigating cyber security risks in finance

Cyber security is a multifaceted risk management issue where technology, processes, and people must be invested. Key best practices include:

Encryption: Protecting private data during transit and storage.
Firewalls: There are several forms of firewalls, with sound ones being used to block such characters from get access to networks.
Intrusion detection and prevention systems: Predicting misuse in a network.
Employee training: The most common social engineering and training employees on cyber security measures and control.
Regular security assessments and penetration testing: Identifying threats or potential threats against systems.
Investing in security tools: Implementing best security solutions such as identity and access control, two factor and three factor authentication, endpoint protection systems, Endpoint detection and response systems, security information and event management systems.
Partnering with a third-party cyber security firm: Approaching generalist and specialist functions with a division of duties that work toward better security performance.

According to this Gartner report, worldwide end-user spending focused on information security and risk management will grow to $188.3B in 2023, up 11.3% from the 2022 levels. This suggests a growing realisation that corporate management needs to invest money in cyber security.

All the above-discussed measures can minimise the vulnerability exposure areas of financial institutions and shield their information and image. Security cannot be an addition or be designed once and for all; the Company must adopt a security culture.

Why choose A&O IT Group

A&O IT Group offers end-to-end security solutions to the financial industry. We are here to demonstrate to you real life examples of the best practices, to introduce to you new generation security devices, and to train your workforce to identify cyber threats.

Reach out to A&O IT Group today and get a consultation on how we can help you with protecting your data, meet regulatory standards and protect your business from threats of the digital world.