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
    News

    EC Rule on Contractual Recognition of Write Down and Conversion Powers

    The European Commission (EC) published the Delegated Regulation 2021/1527 with regard to the regulatory technical standards for the contractual recognition of write down and conversion powers.

    September 17, 2021 WebPage Regulatory News
    News

    APRA Issues Further Guidance on Application of Securitization Standard

    The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to provide guidance to authorized deposit-taking institutions on the interpretation of APS 120, the prudential standard on securitization.

    September 16, 2021 WebPage Regulatory News
    News

    SRB Provides Update on Approach to Prior Permissions Regime

    The Single Resolution Board (SRB) published a Communication on the application of regulatory technical standard provisions on prior permission for reducing eligible liabilities instruments as of January 01, 2022.

    September 16, 2021 WebPage Regulatory News
    News

    APRA Publishes FAQs on Capital Treatment of Overseas Subsidiaries

    The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to clarify the regulatory capital treatment of investments in the overseas deposit-taking and insurance subsidiaries.

    September 15, 2021 WebPage Regulatory News
    News

    EBA Finalizes Guidance to Assess Breaches of Large Exposure Limits

    The European Banking Authority (EBA) published the final report on the guidelines specifying the criteria to assess the exceptional cases when institutions exceed the large exposure limits and the time and measures needed for institutions to return to compliance.

    September 15, 2021 WebPage Regulatory News
    News

    PRA Finalizes Changes to Consolidated Prudential Rules Under CRD5/CRR2

    The Prudential Regulation Authority (PRA) issued the policy statement PS20/21, which contains final rules for the application of existing consolidated prudential requirements to financial holding companies and mixed financial holding companies.

    September 15, 2021 WebPage Regulatory News
    News

    EBA Revises Guidelines on Stress Tests of Deposit Guarantee Schemes

    The European Banking Authority (EBA) revised the guidelines on stress tests to be conducted by the national deposit guarantee schemes under the Deposit Guarantee Schemes Directive (DGSD).

    September 15, 2021 WebPage Regulatory News
    News

    Nordea Bank and EIB Sign Agreement to Fund Green Projects in Nordics

    The European Commission (EC) announced that Nordea Bank has signed a guarantee agreement with the European Investment Bank (EIB) Group to support the sustainable transformation of businesses in the Nordics.

    September 15, 2021 WebPage Regulatory News
    News

    HKMA Endorses Industry Guidance to Support LIBOR Transition

    The Hong Kong Monetary Authority (HKMA) issued a circular, for all authorized institutions, to confirm its support of an information note that sets out various options available in the loan market for replacing USD LIBOR with the Secured Overnight Financing Rate (SOFR).

    September 14, 2021 WebPage Regulatory News
    News

    OCC Issues Booklet on Supervision of Problem Banks

    The Office of the Comptroller of the Currency (OCC) issued a new "Problem Bank Supervision" booklet of the Comptroller's Handbook. The booklet covers information on timely identification and rehabilitation of problem banks and their advanced supervision, enforcement, and resolution when conditions warrant.

    September 13, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7481