Financial institutions suffering from global cybercrime

[Audrey McNeil <audrey () riskbasedsecurity com>]

http://www.insidecounsel.com/2014/09/16/financial-institutions-suffering-from-global-cyber

Cybercrime has become an item of international focus as hackers from all
parts of the globe manage to expose and injure individual and business
profiles. Aside from the obvious risks that hackers pose to consumers,
businesses face unique difficulties in not only addressing cyber security,
but also mitigating cyber crime. The cost of handling cyber issues is
nothing to ignore, as global costs rise in proportion to the severity of
cyber attacks. A recent report from the Center for Strategic and
International Studies (CSIS) — conducted between 2010 and 2013 — determined
that cybercrime costs the U.S. economy $100 billion on an annual basis.
Attorney Arkady Bukh, New York federal defense attorney and the founder of
Bukh Law Firm, shed some light on how brutal these costs actually are for
businesses, and how certain industries are more intensely affected.

Regarding financial institutions specifically, Bukh remarks that there are
different levels of damage done per cyber hack, and that reputational
damage is one of the greatest risks. “If the money (i.e., credit cards) was
stolen from the financial institution then the reputational damage would be
great. On the other hand, if the hackers accessed accounts and transferred
the money out then the financial groups are exposed to a certain level --
they are insured for fraud, but it's hard to tell exactly about the
boundaries of such protection. But, according to banks, this is one of the
costs of running business in today's environment,” says Bukh.

But, of course reputational damage is impossible to buy back, as Bukh
notes, and it’s a specific type of damage. Banks, especially, are less
likely to see business from new clients if word gets around that its own
clients have been hacked one way or another. While the same goes for retail
businesses, it is especially egregious for financial institutions.

Naturally, cybercrime has an effect on the global economy as a whole —
particularly if countries as economically integral as the U.S. are spending
$100 billion to cover damages. While Bukh says that it’s too early to say
how seriously cybercrime has affected the world economy, the chances are it
is having an impact “sooner than later, as for every arrested hacker there
are thousands of new ‘wannabe’ cyber criminals.” Bukh notes that the
traditional cybercrime is being slowly merged with a traditional criminal
world, which poses a whole different kind of threat.

But companies are not at a total loss, nor are they completely at the mercy
of international cyber thieves. Bukh notes that banks — particularly ones
in the U.S. — are adapting to European tactics of preventing cybercrime
including using one-time password generator boxes or USB access cards. Bukh
says that, in the past, U.S. institutions have made it quite easy for
hackers to access accounts and financial transactions.

In the long run, it will continue to be difficult to assess the total
damages done by cybercrimes as long as companies and governments continue
to conceal in part or full how severely they are affected by hacking.

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