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Cybersecurity Threats to Financial Institutions in Bulgaria: A Growing Concern
The Bulgarian financial sector is facing an increasing threat from cyberattacks, which have more than doubled since the pandemic. According to a recent report by the International Monetary Fund (IMF), the risk of extreme losses from cyber incidents has quadrupled since 2017, reaching $2.5 billion.
Financial Institutions at Risk
Financial institutions in Bulgaria are particularly vulnerable to cyber attacks due to the large amounts of sensitive data and transactions they handle. Banks are the most exposed, accounting for nearly one-fifth of all cyberattacks on financial firms globally.
Incidents in the financial sector can have severe consequences, including:
- Erosion of confidence in the financial system
- Disruption of critical services
- Spillovers to other institutions
- Market selloffs or runs on banks
Third-Party IT Service Providers: An Additional Risk
The reliance of financial firms on third-party IT service providers also increases the risk of systemwide shocks. For example, a 2023 ransomware attack on a cloud IT service provider caused simultaneous outages at 60 US credit unions.
Strengthening Resilience in the Financial Sector
To strengthen resilience in the financial sector, authorities should develop an adequate national cybersecurity strategy accompanied by effective regulation and supervisory capacity. This includes:
- Periodically assessing the cybersecurity landscape
- Encouraging cyber maturity among financial firms
- Improving cyber hygiene
- Prioritizing data reporting
- Promoting international cooperation to address cyber risk successfully
International Cooperation and Capacity-Building
The IMF actively helps member countries strengthen their cybersecurity frameworks through policy advice and capacity-building activities. As attacks often emanate from outside a country’s borders and proceeds can be routed across borders, it is imperative for Bulgaria to develop an effective response protocol and crisis management framework in place to mitigate the impact of cyber incidents on the financial sector.
Business Continuity Planning
While cyber incidents will occur, the financial sector needs the capacity to deliver critical business services during these disruptions. To this end, financial firms should:
- Develop and test response and recovery procedures
- National authorities should ensure that they have effective protocols in place to maintain stability in the event of a cyber attack.
By taking proactive steps to strengthen resilience and address cybersecurity threats, Bulgaria can mitigate the impact of cyber incidents on its financial sector.