MAS: Cyberattacks Impact Banks' Profits Meaningfully
A direct cyberattack on a bank would cost it 20 to 35 percent of quarterly profits, even when contingency measures are in place, the latest stress test by the Monetary Authority of Singapore (MAS) showed.
This cost could surge to as much as 65 percent, if no contingencies have been made, said the regulator in its annual Financial Stability Review released on Thursday. Deposits could also decline by 1 to 5 percent.
The fresh estimates come as MAS highlighted the «nascent understanding» of the relationship between cyber risk and financial stability at this point. In addition, a few brokerages in Singapore came under cyber-attacks last month, shining a spotlight on how such attacks could impact the financial ecosystem.
Microprudential Risks
«Many financial institutions have traditionally regarded cyber risk as a microprudential operational risk that can be addressed through entity-specific cybersecurity and contingency measures,» said MAS in the report.
Microprudential risk assessments include looking at liquidity, market, credit, legal and reputational risks, including second-order liquidity and market impacts on financial institutions. Cyber stress tests can serve as a useful tool to quantify the severity of these risks.
