IMF believes global financial stability at risk due to cyberattacks

The International Monetary Fund (IMF) has warned that global financial stability is under threat from the increasing frequency and sophistication of cyberattacks. The risk of extreme losses is also increasing.

In a global financial stability report, the IMF dedicated a whole chapter (out of three) to cyber risks.

The financial sector, according to the IMF, is “uniquely exposed to cyber threats.” Financial operations involve vast amounts of sensitive data and transactions.

In 20 years, the financial sector has suffered more than 20,000 cyberattacks, causing $12 billion in losses. The most direct reported losses from cyberattacks are small, around $500,000. However, extreme losses from cyberattacks have jumped up fourfold since 2017, and malicious cyber incidents were at an all-time high in 2023.

Since 2020, direct losses have amounted to an estimated $2.5 billion.

“Although cyber incidents have thus far not been systemic, severe incidents at major financial institutions could pose an acute threat to macrofinancial stability through a loss of confidence, the disruption of critical services, and because of technological and financial interconnectedness,” the IMF warns.

Cyber incidents at financial institutions or at a country’s critical infrastructure can lead to a loss of confidence, lack of substitutes for the services rendered, and spill over to other sectors.

The IMF itself reported a cybersecurity incident earlier this year. Eleven IMF email accounts were compromised during the breach, detected on February 16th.

“While cyber incidents have thus far not been systemic, the probability of severe cyber incidents has increased, posing an acute threat to macrofinancial stability,” the report reads.

IMF urges financial firms to bolster cybersecurity capacity through stress testing and information-sharing arrangements, among other recommendations. IMF also calls on authorities to develop appropriate and adequate national cybersecurity strategies

“Financial institutions are as vulnerable to steady increase in the frequency and sophistication of cyberattacks as any other sector," said Akshay Joshi, the Head of Industry and Partnerships at the World Economic Forum's (WEF) Centre for Cybersecurity.

The WEF previously warned that efforts to meet cybersecurity objectives are being hampered by an ongoing skills shortage. The world needs five million cybersecurity professionals, “with more than half of public organizations listing a lack of resources and skills as their biggest challenge to improving cyber resilience,” according to a WEF press release.

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