5 Biggest Cyber Threats for Financial Services

5 Cyber Risks for Financial Services Firms

According to a VMware report, cyber incidents and cyber attacks (including insider threats, social engineering attacks, identity theft, web application, and phishing attacks) from cyber criminals increased by a whopping 238% from February to April 2020. This number of cybersecurity attacks is only expected to rise as firms in the financial services industry move operations online.

This is why cyber insurance is necessary. It protects you against all advanced persistent threats involved with malicious attacks.

Below, we'll look at five cyber risks that financial services companies need to watch out for. We’ll also cover some financial services cybersecurity statistics and tips financial services companies can use to protect their business.

1. Phishing

The most common method that hackers use to access client information is phishing. This occurs when a hacker sends you an email pretending to be a large company and gets you to enter sensitive information. 

Criminals may even attach malware to emails; when you open it, it harvests login credentials.

Because phishing emails are becoming harder to recognize, it's a popular technique used by hackers. Reports show that 90% of all successful cyberattacks within the financial industry start with phishing. 

This can have devastating consequences, especially if these individuals access client and employee information.

Fortunately, if you have E&O insurance, you won't have to worry about phishing emails since your carrier will cover client losses.

2. Ransomware

Ransomware attacks increased by 520% between March and June 2020 according to the latest threat report, making them a significant threat to any financial services provider. Hackers will capture client information or lock users out of the system until a ransom is paid, typically in Bitcoin.

But experts advise against paying ransoms because there's no guarantee the attackers will keep their word. They might even save a copy of your files and target you again in the future.

With cyber security insurance, you're protected against ransomware and extortion. Cyber insurance carriers employ teams of professionals who will retrieve your information and prevent hackers from entering your system again.

3. Malware

Although ransomware is most common, other types of software can also harm computer systems in the financial services sector:

• Adware displays pop-up ads and downloads them while draining your computer’s resources in the process. 
• Spyware monitors your internet activity and gathers input information like usernames and passwords.
• Viruses multiply and attach themselves to files to steal information.

This is why it's essential to understand the dangers of all malicious software. Implement anti-malware applications to protect against web application attacks and regular system checks to prevent hackers from infecting your system to access financial data.

4. DDoS Attacks

Also known as distributed denial-of-service attacks, DDoS web application attacks are when your server is flooded with thousands of fake connection requests, forcing it to go offline. 

These attacks are becoming increasingly popular against financial organizations since they can affect various aspects of the business—from customer accounts to payment portals and infrastructure.

Hackers will use DDoS attacks to blackmail companies or distract them from a more dangerous system breach.

5. Bank drops

Bank drops are another cybersecurity risk for financial institutions.

These occur when cybercriminals open bank accounts with stolen client credentials. Criminals collect someone else's information so they can conduct illegal transactions without it being traced back to them.

You can prevent bank drops by using two-factor authentication and manually reviewing personal documents.

Read More: Cybercrime Statistics

How to protect your business against cyber risks

Cyberattacks on financial institutions in 2022 are increasing. So here are a few ways you can protect yourself:

• Back up all data
• Implement strong patch management
• Invest in cyber and E&O insurance 

Back up all data

Backing up data on an external hard drive or cloud software lessens the impact of data breaches. You can restore data earlier, helping you recover from attacks.

Implement strong patch management

The next step is to implement strong patch management. Patch management uncovers weaknesses within your firewall and provides a step-by-step procedure you can use to improve cyber security. 

By staying up to date on the latest firewalls and constantly patching up bugs, you give yourself the best possible chance of avoiding cyber risks.

Invest in cyber and E&O insurance

Even though you’re backing up data and improving your security regularly, you can't eliminate cyber risks. This is where cyber and E&O insurance can help. Depending on your policy, you're protected against data breaches, blackmail, errors and omissions, and other potential threats.

FAQs: Cybersecurity in Financial Services

How are financial organizations different from other businesses when it comes to cybersecurity?

Financial organizations hold a treasure trove of sensitive financial information, making them prime targets for cybercriminals. This includes everything from personal banking details to investment portfolios. The potential for financial gain makes these institutions a high-stakes target.

What are the most common types of cyberattacks targeting the financial sector?

Financial institutions face a wide range of threats, including:

• Phishing: Tricking employees or customers into revealing login credentials or financial information.
• Ransomware: Encrypting data and demanding payment for its release.
• Malware: Malicious software designed to disrupt systems, steal data, or gain unauthorized access.
• Business Email Compromise (BEC): Impersonating executives or trusted parties to initiate fraudulent wire transfers.
• Supply Chain Attacks: Exploiting vulnerabilities in third-party vendors or partners to gain access to the financial institution's systems.

What are the consequences of a data breach for a financial institution?

The fallout from a data breach can be devastating. It can lead to:

• Financial losses: Direct costs from theft, recovery efforts, and potential lawsuits.
• Reputational damage: Loss of customer trust and brand value.
• Regulatory fines: Penalties for non-compliance with industry data security standards.
• Operational disruptions: Impact on services and customer experience.

What role does the Payment Card Industry Data Security Standard (PCI DSS) play in protecting financial data?

The PCI DSS is a global standard that applies to any organization that handles payment card industry data. It sets strict security requirements for handling, processing, and storing cardholder data to prevent fraud and data breaches.

What are some best practices for financial firms to enhance their cybersecurity?

Financial institutions should implement a multi-layered approach to cybersecurity, including:

• Strong access controls and authentication.
• Regular security awareness training for employees.
• Robust incident response plans.
• Regularly patching and updating systems.
• Investing in advanced threat detection and prevention technologies.
• Conducting thorough due diligence on third-party vendors.

How does cyber insurance help financial organizations?

Cyber insurance can provide financial protection in the event of a cyberattack. It can cover costs related to data breach investigations, customer notification, legal fees, and even reputational damage mitigation.

What are some resources available for financial institutions to learn more about cybersecurity?

Several organizations offer guidance and resources, including:

• The Financial Services Information Sharing and Analysis Center (FS-ISAC): Provides threat intelligence and security resources for the financial sector.
• The National Institute of Standards and Technology (NIST): Offers cybersecurity frameworks and guidance for various industries, including finance.
• The Cybersecurity and Infrastructure Security Agency (CISA): Offers alerts, advisories, and resources on cybersecurity threats and vulnerabilities.

Remember, cybersecurity is an ongoing process. Staying vigilant and adapting to new threats is crucial for protecting financial organizations and the sensitive data they hold.

Worth Insurance helps safeguard your business

As more businesses rely on the internet to operate, cybercriminals are using this to access sensitive information and make a profit. 

So it's important to protect yourself against phishing, ransomware, and DDoS attacks, especially if you're collecting client information and providing financial services.

You can do this by backing up all data, implementing patch management, creating strong passwords, and buying E&O or cyber insurance.

Cyber insurance carriers will take care of breaches and phishing attempts, so you can focus on providing clients with the best financial services. If you're looking to safeguard your business, request a free Worth Insurance quote.