Be Vigilant about Supplier and Systemic Risks

Technology is the most powerful business tool but also the biggest source of risk. Anis Pathan, CRO at Chaitanya India Fin Credit delves deep into various risk associated with technologies, vendors and in-house development:

Smriti Pandey: What do you feel are the most critical technology risk mitigation solutions for the MFI segment in the financial sector?

Anis Pathan: In today's interconnected world, with the pervasive use of cloud and open-source technologies, the risk of cyber-attacks is ever-present. It is not a matter of if you will be attacked, but when. The inherent risk of a cyber-attack is always very high. The best way to handle this risk is through thorough preparation, including continuous monitoring of the threat landscape and strengthening cyber risk controls.

However, the most effective risk treatment for cyber risk is to transfer this risk through insurance and contractual liability transfer. Cyber insurance with sufficient limits and well-drafted policy wording is essential in today's cyber security landscape. Organizations must have a cyber policy with reputable and experienced general insurance firms that have a history of handling and settling cyber insurance claims. It is also critical that these firms provide additional services such as legal support, forensic investigation, and negotiation assistance to manage the incident effectively.

Furthermore, it is vital to review all vendor contracts for liability transfer and mandate that vendors have adequate coverage. This ensures that in the event of a cyber incident on vendor premises that impacts the organization, the vendors are financially capable of covering the liabilities. This proactive approach to cyber risk management ensures comprehensive protection against potential cyber threats.

Please compare and contrast the risks among internally developed technologies and externally sourced technologies.