The banking sector in the United States is increasingly becoming more and more of a target for cybercriminals to infiltrate. Financial institutions are becoming vulnerable to sophisticated attack methods by bad actors looking to obtain everything from sensitive information to money. And just as banks are starting to find ways to better protect their assets and information, they have to start worrying about foreign states as threats.
Out of 94 cyber threats that have hit banks in the U.S. since 2007, 23 have been state-sponsored attacks from countries like Russia, China, and Iran. As threats continue to change and grow, several senior regulators are developing a cross-agency approach to testing and protecting banks against major attacks that could completely sideline global payment networks and expose customer data.
New Attacks, New Regulations
Banks are trying to understand how to navigate more sophisticated cyber threats while also trying to work with regulators to meet security demands. Credit risks have long-been examined by regulators through the Shared National Credit Review, which works in coordination with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency to assess loan books for banks.
Currently, banks face thousands of questions from many different regulators year over year. Under new plans from regulators, these questions would be cut down and more limited, but would also put banks under more of a microscope in terms of scrutiny.
As banks build more capital buffers and continue to expose risks that face their industry, many regulators are now pointing to outside risks–mostly hackers–as the greatest threat against the U.S. financial system as a whole. For smaller banks, which don’t have the luxury of going out of their way to spend more on cyber protection, some officials believe that hackers could be essentially gifted entry points into the Federal Reserve’s payments settlement system, Fedwire.
This points to a major hole in the entire cyber protection system in that no matter how small a financial institution is, banks need to be cognizant of the threats they face and invest in not only cyber protection software but cyber liability insurance, which can be used to provide financial payback to banks after a threat has already landed.
The new system from regulators will look to test both defenses and recovery systems. While hacks will continue to take place, the goal is to more quickly identify and isolate the problems to stop the bleeding and recover the stolen data or money.
Overall, the major goal of new regulations is to have the same standards imposed both domestically and internationally as major banks in the U.S. have dealings across the globe. A worldwide coordinated effort to limit exposures and recover information will help to anticipate risks and cut down on the impact of threats.
About Financial Guaranty Insurance Brokers
Since 1983, Financial Guaranty Insurance Brokers has distinguished itself as a provider of Professional Liability, Cyber Liability, and Crime insurance products for entities of all types. To receive timely, personalized service from a knowledgeable and experienced staff, call us today at (626) 793-3330 to speak with one of our professionals.