U.S. consumers are shying away from digital banking due to security concerns. According to a PYMNTS Digital Banking report, 47% of consumers worry about their data security, despite significant interest in digitized banking services. Ransomware also poses a huge threat, with malicious attacks increasing by 1,318% in 2021. This is why modern banking practices need to focus on security to attract and retain new customers.
As the banking industry invests in modern technology and moves toward digital banking, the risk and complexity of cyberthreats also grows. It is challenging for banks to keep up with the pace of change while addressing the cyberthreats affecting these technologies. To stay competitive and increase the adoption of digital banking, banks should reassess their security posture to ensure they’re managing cyberthreats effectively and protecting their infrastructure and data.
Assessing Security Risks for Modern Banking
Banks should incorporate robust risk assessment practices in their cybersecurity programs and reduce potential cybersecurity and data privacy risks and liabilities. Establishing regular risk assessments—which are repeatable—builds a proactive cybersecurity culture in the organization and integrates risk analysis into day-to-day processes. This will also empower organizations to keep a real-time view of their cybersecurity environment, aligned with business and strategic changes.
The question that often comes up with regard to security is: Where do we start to address risks? Risk assessments identify the blind spots in security programs and ensure they are appropriately mitigated. Ultimately, these procedures will enable organizations to prioritize their risk remediation efforts based on their risk appetite and the overall business strategy.
A significant step in the risk assessment process is identifying the critical assets on which organizations’ continuity and livelihood depend, then performing a cost-benefit analysis of potential risks. This will educate senior management on the danger of the cybersecurity risks to the company’s reputation and where to allocate resources to mitigate these risks. Organizations today are struggling to balance their efforts to address vulnerabilities in legacy systems versus mitigating the risks in newly-implemented technologies. There are also concerns about a lack of cybersecurity resources to be able to keep up with all of these new threats. With a comprehensive risk assessment, organizations will be able to make informed decisions about where to focus their mitigation efforts and also justify investments in cybersecurity initiatives.
The banking industry is heavily regulated and there are regulatory and compliance requirements that businesses must adhere to. It is imperative for organizations to remediate security issues to avoid hefty regulatory fines. Cybersecurity risk assessments evaluate the effectiveness of cybersecurity controls and can identify any areas of non-compliance ahead of a regulatory audit.
Introducing Cyberinsurance
What if the worst happens? There’s still a certain level of risk that is unknown to businesses—even with all of the efforts spent on continuous risk assessments and mitigation. With digital transformation, an evolving cyberthreat landscape and significant financial gains for cybercriminals, it’s only a matter of time before an organization is impacted by a breach; that could have a dire impact on its reputation and client relationships.
It’s important to consider other avenues to reduce the impact of cybersecurity risks that cannot be mitigated in-house. Cyberinsurance has helped companies save millions of dollars by covering the losses from a cybersecurity breach and rebuild their brand.
Appropriate cyberinsurance coverage should provide sufficient risk mitigation in the event of a cybersecurity incident. A good continuous risk assessment should provide details on the appropriate amount of cyberinsurance coverage required to reduce these risks. Organizations will be able to work with insurance providers to purchase policies with the right amount of coverage that is tailored to their specific security needs. Insurers will also be able to get a better understanding of organizations’ security posture and better help them in the event of a cybersecurity incident.
Cybersecurity risks are inevitable, but this shouldn’t stop banks from embracing digital banking to provide their customers with the frictionless banking experiences they demand and that they deserve.
