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The Cyber Security of Your Finances / By: Oliver Krzeczowski

Cyber attacks are dangerous disruptions to all business and personal digital infrastructure. Through ransomware attacks, distributed denial of service attacks, and identity theft, threats to financial institutions and consumers are always present. In the first half of 2022, “Around 236.1 million ransomware attacks occurred globally” (AAG, 2023). This figure shows just how constant and relentless bad actors in the cyber industry are. Although this can spark fear, the cyber security systems implemented in the financial industry are described to be “only second to the Department of Defense”, according to an anonymous executive of a major US bank IT department. While cyber risks can never be taken lightly, the risk of mass system bank insolvency is minimal so consumers should be more concerned about identity theft.

The financial cyber system has been experiencing mass digitization that was accelerated by the Covid-19 pandemic, creating more opportunities for bad actors to reach victims through online banking systems. Along with having a dependence on digital systems, financial institutions are heavily interconnected with transactions constantly taking place. When attacks disrupt a bank's transactions, other banks and people are affected, with smaller bystander banks potentially experiencing issues of insolvency. A report from the Federal Reserve Bank of New York suggests that "a cyberattack on any of the five most active U.S. banks could affect 38% of the network" (Kuepper, 2023). Cyber incidents within the financial industry can cause consumers to lose confidence in the safety of their money, which could trigger bank runs, potentially leading to issues of insolvency. Though the possibility of these extreme circumstances is real, it’s very low, as loss of confidence is described to be rarely a long-term issue, and that most cases get resolved shortly. 

The protections implemented for the consumer within the financial industry are very strong. For instance, banks are required by law to return stolen money. A bigger concern is identity theft. Identity theft can wreak havoc on daily life, from ruined credit scores to stolen money, taking years to resolve. Senior citizens are most vulnerable to identity theft. New technological innovations open up new avenues for phone and internet theft, further closing the gap between real and fake. Professor Zhang of Washington University shares that, With the latest development of generative AI, it is becoming more difficult for folks to tell the difference.” It’s important for people to stay informed on issues surrounding their financial institutions and to learn about ways to protect themselves from identity theft.


Sources:

- Anonymous Major US bank IT executive

-Ning Zhang, associate professor of computer science at Washington University.

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