BoE issues cyber attack warning

BoE issues cyber attack warning

Banks would struggle to defend themselves against a state-sponsored cyber attack that corrupted their records over a period of months, according to a Bank of England (BoE) official.

The stark warning came from Anil Kashyap, a member of the central bank's financial policy committee, who was addressing a UK parliamentary committee. 

While banks cyber security efforts have mostly focused on preventing service outages, there has been less focus on attacks that seek to falsify records or corrupt data, he said. 

Consequently, for any hostile states looking "to do maximum damage", such an approach would more likely be effective, said Kashyap. 

He called on banks to bolster their defences against such attacks but also recognised the need for greater state-wide support for individual institutions. 

A commonly stated view from cyber security experts is the complexity involved in cyber attacks that look to cause long term damage to data via malware that can escape detection for weeks and months all the while causing corruption to data. For banks this can cause a problem in identifying which records have been corrupted and which have not. 

"You have this difficult situation where you have to restore the system, where you could be restoring a corrupt system," said Kashyap. 

The policymaker also warned that banks may not be concerned enough about the dangers of systemic risk caused by a cyber attack and are instead more worried about their individual fate or reputation. He referred to banks' use of a limited number of cloud providers as a systemic cyber risk. 

"I don't really care if bank 'x' is offline for a week, even if it's disastrous for their share price, if the services that they provide, that are critical, can be delivered in some other way," Kashyap said. "What is tricky is it could be the case that the (bank) board's incentives of what to worry about are misaligned with the general incentives."

Kashyap also said that the BoE would continue to monitor the market share of big tech firms looking to break into the financial services market, following the unveiling of Facebook's crypto currency and digital wallet plan.

His comments follow that of International Monetary Fund chief Christine Lagarde, who warned that big tech firms' moves into financial sertvices could threaten the stability of the global financial system. 

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