Banks gearing up to buy Cyber-insurance

Recent years have seen a concerning uptick in cyber incidents against banks. In 2023, a data breach at Bank of America exposed over 57,000 customer accounts.

Capital One suffered a major breach in 2019 impacting over 100 million customers and costing $80 million in fines. The risks extend far beyond data theft - the Bangladesh Bank cyber heist in 2016 resulted in $81 million being digitally stolen.

The threat of cyberattacks on banks is not merely hypothetical; it is a tangible and evolving danger. Since the 2016 heist on Bangladesh’s central bank, where hackers exploited vulnerabilities in the SWIFT payment system to steal $101 million, financial institutions have been on high alert. The Federal Reserve Chair, Jerome Powell, acknowledged cybersecurity as the ‘frontier’ of concern, and for good reason. Banks are now 300 times more likely to experience cyberattacks than other institutions.

The interconnectivity of banks further exacerbates the problem. A cyberattack on one major bank can have ripple effects, impacting up to 38% of the network and potentially impairing the solvency of multiple financial institutions. This interconnectedness, coupled with the growing sophistication of hackers, has made the banking sector a prime target for cybercriminals.

RISING COSTS

The frequency and severity of attacks have dramatically driven up cyber insurance pricing. Premiums have spiked as much as 60% for some banks as insurers recalculate the risks. Yet for many in the industry, the costs are well worth the protection.

Jamie Dimon, CEO of JPMorgan Chase believes that risks to assets extend beyond volatile markets, including the rising threat of cyber fraud. He indicated his familiarity with the schemes, scams, and threats today, and is working diligently to keep customer’s wealth as safe as possible. His bank recently increased its cyber coverage by $500 million.