Cyber Risk for the Financial Sector: A Framework for Quantitative Assessment

Cyber Risk for the Financial Sector: A Framework for Quantitative Assessment
Title Cyber Risk for the Financial Sector: A Framework for Quantitative Assessment PDF eBook
Author Antoine Bouveret
Publisher International Monetary Fund
Pages 29
Release 2018-06-22
Genre Computers
ISBN 1484360753

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Cyber risk has emerged as a key threat to financial stability, following recent attacks on financial institutions. This paper presents a novel documentation of cyber risk around the world for financial institutions by analyzing the different types of cyber incidents (data breaches, fraud and business disruption) and identifying patterns using a variety of datasets. The other novel contribution that is outlined is a quantitative framework to assess cyber risk for the financial sector. The framework draws on a standard VaR type framework used to assess various types of stability risk and can be easily applied at the individual country level. The framework is applied in this paper to the available cross-country data and yields illustrative aggregated losses for the financial sector in the sample across a variety of scenarios ranging from 10 to 30 percent of net income.

Powering the Digital Economy: Opportunities and Risks of Artificial Intelligence in Finance

Powering the Digital Economy: Opportunities and Risks of Artificial Intelligence in Finance
Title Powering the Digital Economy: Opportunities and Risks of Artificial Intelligence in Finance PDF eBook
Author El Bachir Boukherouaa
Publisher International Monetary Fund
Pages 35
Release 2021-10-22
Genre Business & Economics
ISBN 1589063953

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This paper discusses the impact of the rapid adoption of artificial intelligence (AI) and machine learning (ML) in the financial sector. It highlights the benefits these technologies bring in terms of financial deepening and efficiency, while raising concerns about its potential in widening the digital divide between advanced and developing economies. The paper advances the discussion on the impact of this technology by distilling and categorizing the unique risks that it could pose to the integrity and stability of the financial system, policy challenges, and potential regulatory approaches. The evolving nature of this technology and its application in finance means that the full extent of its strengths and weaknesses is yet to be fully understood. Given the risk of unexpected pitfalls, countries will need to strengthen prudential oversight.

Cyber Risk, Market Failures, and Financial Stability

Cyber Risk, Market Failures, and Financial Stability
Title Cyber Risk, Market Failures, and Financial Stability PDF eBook
Author Emanuel Kopp
Publisher International Monetary Fund
Pages 36
Release 2017-08-07
Genre Computers
ISBN 148431378X

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Cyber-attacks on financial institutions and financial market infrastructures are becoming more common and more sophisticated. Risk awareness has been increasing, firms actively manage cyber risk and invest in cybersecurity, and to some extent transfer and pool their risks through cyber liability insurance policies. This paper considers the properties of cyber risk, discusses why the private market can fail to provide the socially optimal level of cybersecurity, and explore how systemic cyber risk interacts with other financial stability risks. Furthermore, this study examines the current regulatory frameworks and supervisory approaches, and identifies information asymmetries and other inefficiencies that hamper the detection and management of systemic cyber risk. The paper concludes discussing policy measures that can increase the resilience of the financial system to systemic cyber risk.

Cyber Risk and Financial Stability

Cyber Risk and Financial Stability
Title Cyber Risk and Financial Stability PDF eBook
Author Frank Adelmann
Publisher International Monetary Fund
Pages 32
Release 2020-12-07
Genre Business & Economics
ISBN 1513512293

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The ability of attackers to undermine, disrupt and disable information and communication technology systems used by financial institutions is a threat to financial stability and one that requires additional attention.

OECD SME and Entrepreneurship Outlook 2019

OECD SME and Entrepreneurship Outlook 2019
Title OECD SME and Entrepreneurship Outlook 2019 PDF eBook
Author OECD
Publisher OECD Publishing
Pages 396
Release 2019-05-20
Genre
ISBN 926435882X

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The new OECD SME and Entrepreneurship Outlook presents the latest trends in performance of small and medium-sized enterprises (SMEs) and provides a comprehensive overview of business conditions and policy frameworks for SMEs and entrepreneurs. This year’s edition provides comparative evidence on business dynamism, productivity growth, wage gaps and export trends by firm size across OECD countries and emerging economies.

Cyber Risk Surveillance: A Case Study of Singapore

Cyber Risk Surveillance: A Case Study of Singapore
Title Cyber Risk Surveillance: A Case Study of Singapore PDF eBook
Author Joseph Goh
Publisher International Monetary Fund
Pages 31
Release 2020-02-10
Genre Computers
ISBN 1513526316

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Cyber risk is an emerging source of systemic risk in the financial sector, and possibly a macro-critical risk too. It is therefore important to integrate it into financial sector surveillance. This paper offers a range of analytical approaches to assess and monitor cyber risk to the financial sector, including various approaches to stress testing. The paper illustrates these techniques by applying them to Singapore. As an advanced economy with a complex financial system and rapid adoption of fintech, Singapore serves as a good case study. We place our results in the context of recent cybersecurity developments in the public and private sectors, which can be a reference for surveillance work.

Canada

Canada
Title Canada PDF eBook
Author International Monetary Fund. Monetary and Capital Markets Department
Publisher International Monetary Fund
Pages 85
Release 2019-06-24
Genre Business & Economics
ISBN 1498321119

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This Financial System Stability Assessment paper discusses that Canada has enjoyed favorable macroeconomic outcomes over the past decades, and its vibrant financial system continues to grow robustly. However, macrofinancial vulnerabilities—notably, elevated household debt and housing market imbalances—remain substantial, posing financial stability concerns. Various parts of the financial system are directly exposed to the housing market and/or linked through housing finance. The financial system would be able to manage severe macrofinancial shocks. Major deposit-taking institutions would remain resilient, but mortgage insurers would need additional capital in a severe adverse scenario. Housing finance is broadly resilient, notwithstanding some weaknesses in the small non-prime mortgage lending segment. Although banks’ overall capital buffers are adequate, additional required capital for mortgage exposures, along with measures to increase risk-based differentiation in mortgage pricing, would be desirable. This would help ensure adequate through-the cycle buffers, improve mortgage risk-pricing, and limit procyclical effects induced by housing market corrections.