Cyber risks – the big challenge facing banks

Abstract

Hundreds of known examples of cyber attacks against credit institutions around the world, which inevitably lead to significant financial losses and reputational damage, highlight the need to establish robust mechanisms to prevent, identify and recover from such incidents. The object of research in this article is the contemporary varieties of cyber risks, and subject – their reflections on banking institutions. The purpose of the research work is to illustrate the importance of cyberthreats to banks, both from a financial and reputation point of view, and on this basis to outline some basic requirements for the management of their cybersecurity. An overview of cyber risks that are key to banks is carried out. A summary of direct and indirect costs generated by them is done. It presents the current gaps and problems of banking cybersecurity. The following methods have been applied in the research work: analysis, synthesis, observation, analogy and comparison. The main findings of the study shows that given the widespread digitization in the financial sector in the last decade, cyber risks, such as phishing, malware, distributed denial of service, web application attacks, social engineering, ransomware, are becoming a major threat to banks. The practical significance of the study is expressed in the formulation of measures to optimize cyber risk management in banks.

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