Cyberattacks Against Financial Institutions on the Rise: Experts Warn of Growing Threat
Financial institutions are facing an unprecedented threat from cybercriminals who are increasingly using social engineering tactics to gain access to their systems. According to experts, financial institutions must prioritize training staff to identify phishing schemes and other common tactics used by cybercriminals.
Vulnerabilities in IT Systems
Regularly testing IT systems for vulnerabilities and making software patches as necessary is crucial to preventing attacks. Moreover, monitoring the cyber defenses of third-party vendors is essential, as a single vulnerability in a vendor’s system can compromise an entire institution.
Data Breaches: A Significant Regulatory Compliance Risk
Data breaches that leak protected consumer information are not only a significant regulatory compliance risk under GLBA but also pose operational disruptions and reputational damage. As evidenced by the recent ransomware attack on a third-party vendor, which affected 60 credit unions, cyberattacks can have far-reaching consequences.
Payment Processor/Ach Risk Assessment
The ACH network presents elevated risks due to its rapid transmittal and high volume of transactions. Financial institutions must focus their risk assessments on:
- Fraud
- Settlement errors
- Insufficient funds
- Compliance issues
Identity Theft and Red Flag Risk Assessment
Millions of Americans are victims of identity theft each year. Under laws established by the Federal Trade Commission (FTC), financial institutions are responsible for detecting the warning signs (or Red Flags) of identity theft. A written Identity Theft Prevention Program is mandatory, and institutions must follow through with practices that identify fraudulent account activity.
Remote Deposit Capture Risk Assessment
Financial institutions using Remote Deposit Capture technology must assess:
- Legal and compliance risks
- Operational risks
- Vendor risk
to ensure secure processing and settlement.
Digital Banking Risk Assessment
As digital banking services continue to grow, financial institutions must evaluate:
- Cybersecurity threats
- Potential compliance issues
- Operational risks
Regular updates to identity theft prevention programs are also necessary.
The Transformative Power of Integrated Risk Assessments
Financial institutions must move from quantifying singular risks to creating an integrated approach to risk management. By integrating risk assessments on a single platform, FIs can transform risk from a liability into something that works to their benefit.
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