Understanding Cyber Security Risks in the Financial Sector: Protecting What Matters Most

The financial sector is one of many highly targeted industries for cyber attacks. Its reliance on vast amounts of sensitive data, combined with the high stakes involved, makes it a prime target for cybercriminals. As institutions embrace digital transformation and customers increasingly rely on online and mobile banking, the need for robust cyber security measures to combat increasingly sophisticated attacks is more urgent than ever. In the points below, we cover the most significant cyber security risks in finance and highlight essential practises for financial organisations to implement.

Why the Financial Sector Faces Unique Cyber Security Challenges

Financial institutions store massive amounts of sensitive data, often referred as Personally Identifiable Information (PII), that includes names, identification numbers and transaction histories, making these institutions an attractive target for cybercriminals to exploit vulnerable members of the public. Attacks on banks, insurance companies, and other financial services can have devastating consequences—in 2023, Medibank incurred $75 million in costs related to a breach in October 2022. Such attacks not only compromise data and finances but also eroding customer trust. Consequently, financial institutions face a challenging balancing act: they must ensure the highest security standards while providing seamless, user-friendly digital experiences.

Among the growing list of cyber risks, a few are particularly concerning in the financial sector:

Phishing Attacks

Phishing is a primary method for cybercriminals to gain unauthorised access to systems. By disguising malicious messages as legitimate communications, attackers often target employees within financial organisations to steal sensitive data, login credentials, or payment details. Given the sophistication of these schemes, financial institutions must invest in both advanced filtering technologies and employee awareness training.

Malware and Ransomware

Ransomware attacks, which lock users out of systems until a ransom is paid, are on the rise across many industries, with the financial sector being a top target. Malware also poses a major threat by potentially gaining access to confidential customer information or siphoning funds directly from accounts. A solid cyber risk management strategy in finance is essential to detect, respond to, and mitigate such malicious threats.

Data Breaches

Data breaches expose customers’ private financial information, potentially leading to identity theft, financial fraud, and regulatory fines. Cybercriminals often infiltrate a system and quietly gather information before launching an attack. Since financial institutions are heavily regulated, a data breach can also result in legal repercussions, causing financial losses and reputational damage.

Supply Chain Risks

Financial industries, as in every other sector, heavily rely on third-party vendors for provision of critical services such as payment processing and IT Support. While these partnerships are essential, they also introduce significant supply chain risks through vulnerabilities within vendor’s systems and security practices that may allow cyber criminals to gain unauthorised access to sensitive data or disrupt operations. Establishing an effective supply chain risk management requires rigorous vendor assessments that evaluate information security practices of third parties before engagement. Additionally, a continuous monitoring of vendor activities and adherence to cyber security standards are also essential to minimise exposure while protecting critical assets.

Insider Threats

Not all threats come from outside the organisation – employees, whether through malicious intent or negligence, can unintentionally open doors to attackers. Insider threats underscore the importance of implementing policies and controls that monitor and restrict access to sensitive information.

Cyber Risk Management in Finance – Here are the Essential Best Practises

As cyber threats evolve, so must the strategies that financial institutions employ to safeguard their operations. Here are some recommended approaches to enhance cyber risk management in finance:

• Comprehensive Risk Assessment: Financial institutions should conduct regular risk assessments to identify vulnerabilities in their systems and processes. A thorough evaluation will reveal potential areas for improvement and allow institutions to prioritise their cyber security investments effectively.
• Multi-layered Security: Implementing a multi-layered security approach provides several defence mechanisms at different stages. This approach involves securing endpoints, encrypting data in transit and at rest, and utilising firewalls and intrusion detection systems to prevent unauthorised access.
• Employee Training and Awareness: Training employees to recognise and report potential threats is crucial, as reported by OAIC human error remains a leading cause of cyber incidents resulting in 30% of all data breaches in Australia for the first half of 2024. Regularly updating staff on emerging threats, such as phishing techniques and social engineering, helps create a culture of cyber security awareness.
• Incident Response Planning: A well-defined incident response plan enables institutions to react swiftly and effectively in the event of a cyber attack. This plan should outline roles and responsibilities, establish a communication strategy, and define steps for containment, mitigation, and recovery.
• Continuous Monitoring and Threat Detection: Continuous monitoring of networks, systems, and user behaviour allows for real-time threat detection. An advanced Security Operations Centre (SOC), such as the one offered by Infotrust, provides 24/7 surveillance to identify and address suspicious activities before they escalate into significant issues.

How Infotrust Can Help

The cyber risks facing the financial sector demand expertise, vigilance, and a proactive approach to defence. With over 110 cyber security professionals, Infotrust provides comprehensive solutions designed to mitigate financial sector cyber risks and enhance resilience. From managed security services and penetration testing to employee training, supply chain risk management and incident response, our team is dedicated to safeguarding financial institutions against both current and emerging threats.

At Infotrust, we understand the intricacies of cyber risk management in finance. Our solutions are tailored to protect your organisation’s assets, data, and reputation while ensuring regulatory compliance. If you’re ready to take your cyber security strategy to the next level, contact Infotrust today – together, we’ll build a secure foundation for your institution’s future.