Technology continues to grow globally, extending ever deeper into financial services. Of course, along with increased technology, comes increased cyber risk. Businesses, however, may not realise the complexity of the IT risks they face, while furiously fast-tracking new business processes without fully understanding the risks that new technology itself can accelerate.
CNA Hardy’s most recent Future Trends Risk Insight Report states that businesses are investing in technology, without being fully aware of the associated risks. It reports 59% of respondents invested in technology improvements, while only 37% are concerned that cyber risk could become the biggest threat they’ll face in 2019. As the digital age further shapes financial services – globally and locally – the need for better cyber awareness coupled with sustainable compliance is evident and goes hand in hand with the evolution of the industry as a whole. Machine Learning and Artificial Intelligence (AI) are becoming increasingly prevalent, Big Data is bigger than ever, and RegTech could revolutionise how we analyse trader behaviour and manage verifying identity. These all point towards the need for heightened cyber security.
Dealing with your electronic DNA
It is essential to assess your organisation’s electronic DNA and do thorough due diligence on third-party providers. It’s through third-party providers that almost all fraud creeps in, with Marriot Hotel’s latest data breach as a prime example. The estimated cost of managing the breach of some 500 million Marriot guests’ details, could cost $1billion all in for litigation, settling of fines and replacing passports. This is a steep sum but won’t go towards rebuilding any damages to the hotel group’s reputation.
A cost of this magnitude is inconceivable for many businesses to contemplate, but while a similar incident of this size may not be a realistic threat for most, it’s always better to be safe than sorry when it comes to setting up procedures for systems and other risk mitigation measures.
For smaller businesses, keeping up with technology can be tough from an affordability perspective to implement, yet many businesses will have to introduce technology or outsource partners to simply survive in the future.
Size isn’t the biggest issue
Whatever the size of your business, bringing in new technology comes with potential risk if you do not understand how to use it properly, or fail to guard against intruders making off with your client data. By putting in the correct safeguards, one can avoid unintended consequences, which could end up being a priceless exercise.
Corporate risk management must change as well, and subsequent policies set in place in response to the evolving technology-led world we live in. Client needs are shifting too, with some requiring more tech-savvy capabilities than others, so the way we manage this will also have an influence on risks that may arise. If other parts of the world are anything to go by, technology is changing the game and empowering consumers. We need to embrace this, while also putting in effective protective measures.
Accept and protect
Cyberisk is real and won’t go away, particularly as technology continues to tick upwards and hackers amend their approaches, making smarter moves each day. Safeguarding client data and other sensitive information is always best, and smart regulations to come will pioneer a way forward in delivering financial services.
Article by Richard Rattue, Managing Director, Compli-Serve