Italy’s Financial Institutions at Risk: Escalating Cybersecurity Threats
As cyberattacks continue to rise globally, Italy’s financial institutions are increasingly vulnerable to devastating losses and potential solvency issues. According to a recent report by the International Monetary Fund (IMF), the risk of extreme losses from cyber incidents has more than quadrupled since 2017 to $2.5 billion.
Financial Sector Exposed
The financial sector is particularly exposed to cyber threats, with financial firms handling large amounts of sensitive data and transactions making them attractive targets for criminals seeking to steal money or disrupt economic activity. In Italy alone, attacks on financial institutions account for nearly one-fifth of total cyber incidents, with banks being the most vulnerable.
Consequences of a Severe Incident
A severe incident at a financial institution in Italy could erode confidence in the financial system, disrupt critical services, and cause spillovers to other institutions. For example:
- A cyberattack on a bank could lead to market selloffs or runs on banks, as has been seen in some cases abroad.
- Modest deposit outflows have occurred at smaller US banks after a cyberattack.
New Vulnerabilities
The increased reliance on third-party IT service providers and artificial intelligence is also creating new vulnerabilities for financial firms. For instance:
- A 2023 ransomware attack on a cloud IT service provider caused simultaneous outages at 60 US credit unions.
Mitigating Risks
To mitigate these risks, Italian authorities must develop adequate national cybersecurity strategies accompanied by effective regulation and supervisory capacity. This includes:
Key Initiatives
- Periodically assessing the cybersecurity landscape
- Encouraging cyber maturity among financial sector firms
- Improving cyber hygiene
- Prioritizing data reporting and collection of cyber incidents
- Sharing information among financial sector participants to enhance collective preparedness
International Cooperation
International cooperation is also crucial in addressing cyber risk successfully, as attacks often emanate from outside a country’s borders and proceeds can be routed across borders. The IMF actively helps member countries strengthen their cybersecurity frameworks through policy advice and capacity-building activities.
By working together, Italian authorities and financial institutions can better prepare for and respond to the escalating cybersecurity threats facing Italy’s financial sector.