17 January 2023

IMF's Adrian: Cyber Resilience—Delivering through Disruption

What cybersecurity challenges could arise as new forms of money and technology alter the financial landscape? And finally, how can we foster effective regulation and supervision of cyber risks, and achieve operational and cyber resilience...

This year, we explore cyber resilience through disruptions. We ask: What key lessons can be drawn from recent geopolitical conflicts? What cybersecurity challenges could arise as new forms of money and technology alter the financial landscape? And finally, how can we foster effective regulation and supervision of cyber risks, and achieve operational and cyber resilience that will ensure the delivery of critical financial services even when disruptions are likely?

Before exploring these three questions, I would like to extend special thanks to our co-sponsor, the Financial Sector Stability Fund, for making this workshop possible with its generous contributions. I am also deeply grateful to our speakers for joining our workshop and sharing their invaluable knowledge and experience.

Last year, we had the opportunity to engage with some of our member countries that were targeted by cyber-attacks that disrupted the delivery of public services. The severity of these attacks serves as a reminder for us all. If we want to successfully drive change through greater digital connectivity, we must address the underlying vulnerabilities. To expand on my thoughts, let me return to my three questions.

What have we learned from recent geopolitical conflicts? Disputes can arise for many reasons, and when differences are not settled through diplomacy, they could needlessly deteriorate into wars—including in cyberspace. In the modern age, as warfare goes online, we are more likely to witness cyber-attacks and the use of state-of-the-art technology. Compounding the problem, cyber-attacks often spillover and generate a much broader impact than originally intended.

Cyber incidents could come with great uncertainty and complexity. Perpetrators and their motivations are often obscure. Cyber operations could involve commercial, government, or military targets.  Recent incidents demonstrate the ability of computer hackers to cripple a country’s critical infrastructure. Electricity, water, telecommunications, and transportation are among these essential infrastructures—those that help a society and economy function. Third-party service providers that are part of the complex supply chains could also be disrupted.

The financial sector continues to be a target of choice for criminal gangs and other types of attackers. For the financial sector, critical infrastructure includes systems for clearing, settling, or recording payments, securities, derivatives, or other financial transactions. Given their systemic importance in most jurisdictions, their operations and cyber resilience are subject to a high degree of oversight to ensure their safety and efficiency. Preparedness is key across the different types of cyber-attacks—phishing, supply chain attacks, or ransomware, for example—that could unfold because of geopolitical conflicts.

Which takes me to my second question.

What cybersecurity challenges could arise with the transformation of the financial landscape?  Fintech—such as new and emerging forms of digital money and finance—has financial stability benefits and risks that need to be carefully weighed. As I mentioned earlier, greater digitalization brings greater vulnerabilities. As more systems and devices are connected and depend on computer software to function, this widens the attack surface. The interconnectedness poses challenges for financial stability. As the financial sector adopts newer technologies and requires greater involvement of third and fourth parties, emerging concentrations of technology, vendors, and service providers assume systemic proportions....

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