Tag: ratings

Cyber attacks can harm credit ratings mainly through reputational damage and potential monetary losses, the ratings agency said in a report titled ‘Cyber Risk In A New Era: The Effect On Bank Ratings.’

Banks and other financial institutions are attractive targets for cyber criminals because they possess valuable personal data and play a critical role in servicing particular financial or economic needs and segments.

“Cyber attacks have had only a limited effect on bank ratings to date but can trigger more rating actions in the future as cyber incidents become more frequent and complex,” said Credit Analyst Irina Velieva.

Weak governance

Institutions with weak risk governance are less prepared for, and therefore more vulnerable to cyber attacks, it said.

“Although it is crucial to learn from previous attacks and strengthen cyber-risk frameworks in real time, the appropriate detection and remediation of attacks takes precedence because the nature of threats will continue to evolve,” S&P said cyber defence will become an increasingly important part of entities’ general risk management and governance frameworks, in need of increasing spending and more sophisticated tools.

“We acknowledge, however, that this might not be straightforward for many entities, especially the ones with weaker risk-control frameworks and insufficient budget allocated for cyber defence.”

Threats to banks

According to RBI’s annual report for 2019-20, the amount involved in banking frauds grew 2.5 times to Rs 1.85 lakh crore in 2019-20 compared with Rs 71,500 crore in 2018-19.

The internet banking system works through a wide set of applications, networking devices, internet service providers, and many other entities. All of these are potential entry points for attackers.

Several banks and financial establishments use third-party services from other merchants and fintechs. If those outsider merchants don’t have appropriate security set up, the bank could land in a soup.

Under spoofing, hackers find a way to imitate a financial institutions’ website’s URL with a website that looks and functions the same. When customers enter their login data in an impersonated website, the data is then taken by the cybercriminals to utilise it later.

Cybercriminals can utilise a person’s personal and financial data and commit fraud. A privacy breach in a bank can also lead to the information of the bank’s customers being sold or purchased on the dark web by other cybercriminals.