IMF Says Financial Firms Lost More Than $12 Billion to Cyber-Attacks

The International Monetary Fund (IMF) has said that organizations offering services in the financial sector have lost over $12 billion due to cyber-attacks.

In a Global Financial Stability Report published earlier this month, the IMF said this money was lost in more than 20,000 cyber-attacks. The global institution mentioned there was a notable increase in hacking incidents targeting firms offering financial services.

The IMF said banks were the most affected by these attacks. It further said that the report demonstrates that there is an increased risk of financial institutions recording massive losses because of cyber-attacks.

Financial Firms Lose $12 Billion to Hacking

In its report, the IMF also said that the losses suffered by these financial firms could lead to companies facing a capital crunch. It could also jeopardize the solvency of banks if they lose more money than they can make.

“The size of these extreme losses has more than quadrupled since 2017 to $2.5 billion. And indirect losses like reputational damage or security upgrades are substantially higher,” the global body added.

Financial firms are increasingly being targeted by cyber attackers because of the financial benefits. Around one-fifth of all the cyber-attacks that happen globally target the financial industry. Cybercriminals are now looking to steal money and disrupt economic activities.

Cyber-Attacks Threaten Economic Stability

Cyber-attacks could undermine the credibility of the financial system, according to the IMF, leading to economic instability. The incidents could also trigger market sell-offs and bank runs as people rush to withdraw funds from traditional firms.

The bank noted that cyber-attacks have not caused any significant bank runs so far. However, there were significant deposit outflows reported after small banks in the US suffered a cyber-attack.

The IMF notes that cyber incidents can affect normal services such as payment networks. If this happens, it could create a risk of economic instability if people do not have the means to make payments for goods and services.

The threat of cyber-attacks also grows with reliance on third-party IT service providers and AI could result in financial firms facing additional risks including outages because of ransomware attacks on service providers.

The IMF notes that the global financial industry is also facing a growing risk of cyber-attacks because of the increased demand for digitalization and tensions in the geopolitical arena. Firms are needed to structure their policy and governance frameworks in such a way that they will keep pace.

Among the ways that this threat can be mitigated are effective regulations and strategies that will improve national cybersecurity. There is also a need to push for maturity in the cybersecurity space while offering better security frameworks and platforms to report incidents.