Featured Product

    RBNZ to Address Cyber Risk Through Risk Management Guidance

    February 25, 2020

    RBNZ announced that it is strengthening its efforts to enhance resilience of the financial system from cyber threats, including developing risk management guidance and promoting information-sharing in collaboration with industry and other public organizations. Additionally, RBNZ published a bulletin/paper that examines the concept of cyber resilience and estimates the potential costs of cyber risk for the financial system in New Zealand. With the frequency and severity of cyber-security incidents on the rise, the paper highlights the importance of the financial sector remaining vigilant and managing cyber risks effectively.

    The paper published by RBNZ draws on two internationally recognized methods to shed more light on the potential cost that cyber risk poses to the banking and insurance sectors in New Zealand. The first method is a bottom-up approach that uses firm-specific data from abroad, which is then extrapolated to New Zealand. The second method uses top-down analysis, linking the cost of cyber incidents to GDP. The two methods produce remarkably similar results for New Zealand. The estimated average cost of cyber incidents is likely to be about NZD 104 million per annum for the banking industry and NZD 38 million for the insurance industry. To put this cost in context, it is the equivalent of 2% to 3% of annual profits for the banking and insurance sectors. According to the value-at-risk method, in any given year there is a 5% chance that the costs could rise beyond NZD 2 billion for the banking sector and more than NZD 300 million for the insurance sector, nearly equivalent to 34% (25%) of the annual net profits for banks and 25% of the annual net profits for insurers.

    The analysis presented in the paper shows that the financial cost from cyber incidents is real and has the potential to be significant. Additional costs that have not been captured by the two approaches used in this paper include the loss of confidence in the financial system, the resulting impact on innovation and the adoption of new technological developments, and the diversion of resources away from productivity enhancing investment. Furthermore the country’s cyber-security agency CERT NZ found that more than 60% of the cyber-attacks on the New Zealand organizations in 2018 targeted firms in the financial and insurance services sector. Therefore, managing cyber risk and building cyber resilience should be of importance to the financial sector as well as its regulators. 


    Related Links

    Keywords: Asia Pacific, New Zealand, Banking, Insurance, Cyber Risk, Cyber Resilience, Fintech, Value-at-Risk, Bottom Up Approach, Top Down Analysis, RBNZ

    Related Articles

    FINMA Approves Merger of Credit Suisse and UBS

    The Swiss Financial Market Supervisory Authority (FINMA) has approved the takeover of Credit Suisse by UBS.

    March 21, 2023 WebPage Regulatory News

    BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks

    The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.

    March 13, 2023 WebPage Regulatory News

    OSFI Finalizes on Climate Risk Guideline, Issues Other Updates

    The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.

    March 12, 2023 WebPage Regulatory News

    APRA Assesses Macro-Prudential Policy Settings, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) published an information paper that assesses its macro-prudential policy settings aimed at promoting stability at a systemic level.

    March 07, 2023 WebPage Regulatory News

    BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending

    BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.

    March 03, 2023 WebPage Regulatory News

    HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks

    The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.

    March 02, 2023 WebPage Regulatory News

    MFSA Sets Out Supervisory Priorities, Issues Reporting Updates

    The Malta Financial Services Authority (MFSA) outlined its supervisory priorities for 2023

    March 02, 2023 WebPage Regulatory News

    German Regulators Issue Multiple Reporting Updates for Banks

    Deutsche Bundesbank published the nationally deactivated validation rules for the German Commercial Code (HGB) users on the taxonomy 3.2, which became valid from December 31, 2022

    March 02, 2023 WebPage Regulatory News

    BCBS Report Examines Impact of Basel III Framework for Banks

    The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.

    February 28, 2023 WebPage Regulatory News

    PRA Consults on Prudential Rules for "Simpler-Regime" Firms

    Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.

    February 28, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8806