The rapid pace of digital transformation in the financial services sector has pushed cybersecurity threats atop of businesses’ key risk concerns, a recent survey from operational risk association ORX has revealed.
Participating organisations in this year’s second Top Risk Review, which included banks and insurance companies, have ranked information security risk as the industry’s biggest challenge, followed by technological and third-party risks.
These three risks reflect the financial services sector’s current strategic priorities, with digitalisation efforts in the industry heavily impacting risk scores, according to the survey.
“Fierce competition from digital-centric disruptive market entrants, the threat of rapidly evolving cybercrime, the lasting impact of the COVID-19 pandemic, and growing stakeholder expectations are all driving firms to adopt new technology at a faster pace than ever before,” said Luke Carrivick, director of research and information at ORX.
“The knock-on effect is a new form of risk management that will mitigate any potential oversight of change and vulnerabilities that may be exposed, discovered and potentially exploited [by cybercriminals] along the way,” he continued.
The report added that while the cybersecurity risk landscape has been rapidly evolving, giving rise to more frequent and sophisticated attacks and creating a sense of “living in constant fear” among businesses, most organisations were able to successfully stave off a cyberattack.
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External fraud has also entered the top five risks in the recent survey, something that did not surprise Carrivick.
“External fraud has been an ever-present risk and, alongside a growing cyber threat, there has been an increasing variety of physical external fraud,” he said. “These, combined with increasing fraudulent activity and customer vulnerability due to COVID-19, has created the perfect storm.”
But according to Carrivick, the rise of these challenges also has a positive impact among industry players.
“Businesses are now focusing to a greater extent on building their operational resilience, with a focus on areas such as the impacts of hybrid working, and longer term, how a changing climate will impact operations,” he said.
