Cyberattacks nationwide keep growing in the financial industry; 70% of institutions say cybersecurity is now their top concern. On average, 26% of financial institutions fall victim to cyber fraud (Source). What happens if your financial institution is victim to a cyberattack? Here’s the impact of cybersecurity risks on financial services.
Legal Consequences
There are regulations for the financial industry regarding the protection of private data. Regulations like the Sarbanes Oxley Act (SOX) and The Payment Card Industry Data Security Standards (PCI DSS) regulate how financial institutions handle private data and the security measures they must abide to. Failing to have the proper security can result in legal action against your company. When there is a cyber-attack, the legal consequences following will expose if your company was following the proper protocol. The legal damage can be costly. Victims will file lawsuits. You will be found liable for the cyber-attack if your company is not following the enforced regulations. The NYDFS Cybersecurity Regulation (23 NYCRR 500) is a set of regulations from the New York Department of Financial Services that places new cybersecurity requirements on financial institutions. The regulation requires financial companies to install a detailed cybersecurity plan, enact a comprehensive cybersecurity policy, and initiate and maintain an ongoing reporting system for cybersecurity events.
Reputation Damage
Your reputation is your lifeline to long term success in business. Encountering a cyberattack can destroy your reputation as a financial institution. Customers want to know that they can trust your company to handle their money. In a recent survey, 87% of respondents said that they would take their business elsewhere if they feel like their personal data is being compromised (Source). In another survey, 85% of the same respondents said they would tell others about their negative experience. How your institution responds to an attack can make or break your chance for new opportunities with other organizations. Having stellar cybersecurity will bring more prospects to your business. Represent that you care about the well-being of your customers’ data through your cybersecurity. Failing to protect your data compromises your reputation, which can hold years’ worth of damage.
Loss of Productivity
Like any disruption, a cyberattack can negatively affect your operations and hinder productivity. Financial institutions are a prime target for cyberattacks since they have many networks that are hackable like ATM’s, important databases, network routers, secure financial transfer software networks, and the software staff use in day to day operations. All these points of access offer hackers multiple chances to disturb your business operations, resulting in a loss of productivity. Your customers also rely on these networks like ATMs and secure financial transfer software, making it impossible for your customers to deposit and withdraw money. On average, 92% of ATMs are at risk for attack (Source). Protect your business’s technological infrastructure with cybersecurity to avoid the risk of losing productivity. The consequences can have long-lasting effects on your business.
Persisting Financial Injury
One of the biggest impacts on your financial institution from a cyberattack is the financial repercussions that follows. Annually, the cost of cyberattacks in the financial industry reached $18.3 million annually per company last year, with the most expensive and long-lasting attack in cybercrime is typically committed by insiders (Source). Cyberattacks can directly negatively affect your bottom line. Long term, investors will take the cyberattacks into consideration and your stock price will be affected. In 2019, Capital One saw their share price drop 5.9% after suffering a serious cyberattack. A financial institution will suffer from a loss of revenue, legal expenses and fines, ransom payments, and additional IT investments.
How to Prevent Cyber Attacks
Your financial institution can prevent cyberattacks by investing into cybersecurity programs and training for its staff. Investing into the proper tools can allow your organization to be ahead of a potential cyberattack. Avoid the financial and legal implications of cyberattacks by following all regulations regarding how to store private data. Perform cybersecurity risk assessments to see if your current strategy is strong enough to protect you. Remember to update your software often to avoid any roadblocks in the cybersecurity software. Don’t underestimate the lengths hackers will go to access your secure network. Training employees about cybersecurity can decrease your chance of an attack and lessen the risk of insider cyberattacks. On average, financial institutions spend about 10% of their IT budget on cybersecurity (Source). Investing into sophisticated programs gives you the biggest advantage against cyber criminals.
Stay Secure with Kyber Security
As the cyber threat landscape constantly evolves, your security measures should be one step ahead. Kyber Security has dedicated professionals experienced in protecting your organization from ever increasing cyber threats. We will work tirelessly to keep your company protected from cyber-attacks.
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