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Cybersecurity Vulnerabilities Threaten Financial Stability, OFR Says

by on December 6, 2017
 

Financial stability of any nation can be influenced by a large variety of factors. Cybersecurity is one of those very real threat which is often underestimated. According to the US Office of Financial Research, it is evident things will need to change in the near future.  How this needs to be achieved in the future, remains to be determined. The concern by the OFR shouldn’t be ignored whatsoever.

It is good to see the OFR acknowledge cybersecurity needs to be taken more seriously. Unfortunately, a lot of financial institutions struggle in this regard. Every year, we see new vulnerabilities emerge, and the past 12 months have been no different in this regard. Especially market risk is a factor which shouldn’t be overlooked by any means. This is especially true in the bond and stock markets. Many people underestimate the power such changes have. It would shake up financial stability in the US if a shift were to happen.

OFR Grows Concerned Over Cybersecurity Threats

Moreover, the cybersecurity vulnerabilities are a growing concern as well. The OFR unveiled two new tools to inform people about these threats. A vulnerabilities monitor has been created to give early warning signals of potential problems. Six different categories are identified, including solvency and leverage, contagion. and credit-related threats. There is also a stress index, which displays the daily stress in global financial markets.

OFR Director Richard Berner comments:

“We assess threats to financial stability by weighing vulnerabilities in the financial system against its resilience. Underneath our moderate assessment are changes in the balance between financial-system vulnerabilities and resilience.”

It is evident financial stability is difficult to achieve. While a lot of cybersecurity threats exist, there are other issues to address as well. If banks can take the cybersecurity side of things more seriously, the majority of problems will be resolved automatically. However, there is a growing need to keep analyzing this industry and its potential risks. There are still a lot of problems which can and need to be addressed in the coming years. We can only hope things improve from here on out.

Header image courtesy of Shutterstock

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