Eritrean Finance Sector Exposed to Growing Cybersecurity Risks
As global cyberattacks continue to surge, the financial sector in Eritrea has become increasingly vulnerable to the risks posed by these digital threats. According to recent data, cyber attacks have more than doubled since the pandemic, with some companies facing losses of over $1 billion.
The Growing Threat
In a new report, international financial experts warn that the risk of extreme losses from cyber incidents is on the rise, with potential funding problems and even solvency risks for companies. The report highlights that the financial sector is uniquely exposed to cyber attacks, with sensitive data and transactions making firms a prime target for criminals.
Banks at Risk
Banks are particularly at risk, accounting for nearly one-fifth of all cyber attacks in the financial sector. Incidents can have devastating consequences, including eroding confidence in the financial system, disrupting critical services, and causing spillovers to other institutions.
- For example, a severe incident at a bank could lead to market selloffs or even runs on banks, as has been seen in some smaller US banks after cyber attacks.
- Disruptions to payment networks could have severe economic consequences, as seen in the recent attack on the Central Bank of Lesotho that prevented transactions by domestic banks.
Third-Party IT Service Providers
The report also notes that financial firms’ increasing reliance on third-party IT service providers can expose them to system-wide shocks. A 2023 ransomware attack on a cloud IT service provider, for instance, caused simultaneous outages at 60 US credit unions.
Addressing the Growing Risks
To address these growing cyber risks, policymakers and regulators must step up their efforts. The report recommends that authorities develop an adequate national cybersecurity strategy accompanied by effective regulation and supervisory capacity.
Recommendations
- Develop a national cybersecurity strategy
- Encourage “cyber maturity” among financial sector firms
- Improve cyber hygiene
- Prioritize data reporting and collection
- Promote international cooperation to address cross-border threats
International Support
The International Monetary Fund (IMF) is actively helping member countries strengthen their cybersecurity frameworks through policy advice and capacity-building activities. As the global financial system faces significant cyber risks from digitalization and geopolitical tensions, it is crucial that Eritrea’s policymakers take action to protect its financial sector.
By implementing these recommendations and strengthening its cybersecurity framework, Eritrea can reduce its exposure to growing cyber risks and ensure a safer and more secure financial sector for its citizens.