The Impact of Cyber Attacks on the Banking Industry

 

There have been increasing numbers of cyber attacks reported in recent years across all industries and it is costing the United States an absolute fortune in cyber security. Obama announced that $19 billion  was to be dedicated to the ongoing fight against cyber criminals, highlighting the gravity of the threat it now poses to businesses and even households.

In 2016 there were widely reported attacks on PayPal, Twitter and Spotify to name a just a few of the big companies that have been targeted. The number of cyber attacks across the world is increasing and businesses are spending more and more money in deterring the crime.

Banking Sector Most at Risk

Of course, the banking sector is one of the industries that are most at risk, given the nature of the data that they hold. This means that banks have had to dedicate significant funds on developing their digital infrastructure to strengthen their cyber security. The banking world has long been seen as a very profitable industry and for many banks that still remains to be true. Investment banking experts like Fahad Al Rajaan demonstrate that the banking sector can still be a very effective way of making money. It is therefore vital that banks are protected from cyber-attacks.

Preventing Cyber Attacks

As well as spending more on software to reduce the chances of an attack, companies now spend more on resources dedicated to preventing cyber-attacks. This means that extra IT personnel are required, extra training for all staff and more resources allocated to analyzing their cyber security and performing risk assessments.It also means that more robust policies and processes must be introduced. This can vary from developing and delivering online training for staff to raise awareness about the risks of cyber security, to employing a whole team of experts to audit the processes. It is certainly becoming a very costly affair.

Cyber attacks not only cost businesses from the initial financial sting, they are also impacted by the reputational damage that the attacks can cause for years to come. If somebody feels that their money isn’t safe with a bank, then they are likely to close their account and go to another one that they feel will protect their money better. The more publicity that a cyber attack attracts, the higher the reputational damage will be.As mentioned before, the government is committed to driving down and eventually eradicating the threat of cyber attacks. Greater cyber security laws are being ratified and harder punishments will be a deterrent for many would-be cyber criminals.

 

Finding a Solution

It is unfortunate that such huge amounts of money are being spent on cyber crime, both by the government and by businesses. Until a solution is found, it looks like this trend will continue and the threat of cyber attacks will dominate how businesses setup their IT structures and policies.

 

 

 

 

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WannaCry Attack is Actually Good for Cyber Security Stocks

Consumers and companies had a rude awakening recently. They’re all at risk of cyber attacks. One of the biggest cybersecurity developments recently was the WannaCry attack. Now, WannaCry is ransomware, which is a type of malware that blocks users access to their data until a ransom is paid to the hackers to regain access. On May 12, 2017, WannaCry began to infect Windows-based computers across the globe, primarily through phishing email scams and a worm feature in the ransomware.

The WannaCry attack spread to 150 countries, and targeted approximately 200,000 organizations. The WannaCry ransomware exploited a flaw in Microsoft’s Windows software, which was discovered by the U.S. National Security Agency and leaked by hacker. Although WannaCry affected millions of users and hundreds of thousands of organizations, it’s good news for the cyber security industry.

 

Highly Publicized Cyber Attack

Now, when there is a highly publicized cyber attack, it tends to be good news for cyber security companies, and stocks tend to rise off of this news. For example, Sophos Group PLC, which is a UK-based cyber security company, saw its stock rise over 7% and set a record high. This was primarily due to the company’s guidance raise.

In the event of a cyber security attack, traders price these events in, as this could mean more potential business for publicly-traded cybersecurity-related companies. In turn, this should drive revenues and earnings higher, which should cause cybersecurity companies’ stock prices to rise.

According to trader Jason Bond, “We’ve seen cybersecurity stocks run higher following some cyber attacks on companies, such as the attacks on Yahoo, Target and Home Depot. The idea behind is this move is quite simple. When hackers attack companies or users, those companies and users may look to increase their defense against another attack. To defend against cyber attacks, these companies will look to leverage the technology of well-established cybersecurity firms.”

We saw this in some cybersecurity stocks, such as FireEye Inc (NASDAQ: FEYE),  an enterprise cybersecurity company that provides products and services in an attempt to protect against cyber attacks and threats. After the news of the WannaCry attack was released, FEYE closed up over 5% that following day. Here’s a look at FEYE on the 15-minute chart, after it hit a high above $16.

 

Source: TradingView

Now, that wasn’t the only cybersecurity-related security that gained that day. Traders may use HACK as an investment vehicle to gain exposure to the overall industry, rather than just one cybersecurity-related company. The PureFunds ISE Cyber Security ETF ultimately closed up over 3% on the trading day following the WannaCry reports. The PureFunds ISE Cyber Security ETF (NYSEARCA: HACK), the world’s first cybersecurity exchange-traded fund (ETF), shares also saw a rise following the WannaCry attack. The PureFunds ISE Cyber Security ETF offers investors away to gain exposure to the cybersecurity industry, and the fund is comprised of companies offering consulting, software, hardware and services to defend against cyber attacks.

 

Here’s a look at the ETF following the WannaCry reports, on the 15-minute chart.

 

 

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WannaCry Malware Is Gone But Still Leaves A Lasting Impression

 

Over the past few years, ransomware has become an enormous problem throughout the United States and abroad. It is also a unique problem that is far different from other types of computer viruses. Unlike other malicious software, ransomware is specifically designed with the intent of forcing the victim to hand over their money. On May the 12th, the world was hit with a cyber-attack unlike anything it had ever seen before. The primary weapon of the attack was the WannaCry ransomware. On the Friday of the attack, the nefarious software infected an estimated 230,000 computers in more than 150 countries.

 

Affected by These Attacks are Groups like The National Health Service in Britain

Of course, most onlookers were more surprised by the groups that fell victim to the attack. The National Health Service in Britain experienced major disruptions. Simultaneously, Deutsche Bahn, Telefonica and even FedEx became victims of the hackers. When these companies found out they have fallen prey to the hackers, they received a warning screen on their computers demanding ransom ranging in price from 300 to 600 dollars. All of the files on the computers were encrypted. While workarounds were eventually discovered, it was originally believed that paying the extortion money was the only way to obtain the decryption code to unlock their files.

A Lasting Impression left Behind.

While the WannaCry ransomware attack has ended, it has undeniably left a lasting impression behind. For starters, the vulnerability, which allowed hackers to install the malicious software on the victims’ computers, was previously identified and utilized by the United States National Security Agency. The NSA used the vulnerability to their advantage and did not alert Microsoft. A hacking collective, The Shadow Brokers, gained access to the NSA’s tools and documents late last year. Originally, the group attempted to auction off the tools used by the NSA. Microsoft became aware of the problem after leaks from the hacking group. This gave the technology company plenty of time to release patches, but obviously not everyone installed the patch in time.

The Impact

After the attack, Kaspersky Lab analyzed the impact and confirmed that Russia, India, Ukraine, and Taiwan were hit harder than other companies. However, the National Health Service were disrupted the most. Vape technology, tablets and smartphones were generally invulnerable to the attack. In fact, it only impacted older Windows computers that had not been upgraded to the Windows 10 operating system and the latest patch. While experts concur that the impact of the attack was relatively low, it could be a sign of things to come in the near future.

For instance, security experts agree that the results could be far direr had the attacked targeted something more dangerous, such as nuclear power plants or railway systems. At the end of the day, WannaCry might be finished, but it could easily return in the future. The Wall Street Journal and others believe the attack could be linked to North Korea. Whether or not that is true, one thing is certain. Cyber security firms will need to take steps to address these security risks and flaws as quickly as possible. Failing to do so could result in something far worse in the future.