Financial institutions are looking for customised cyber solutions amid growing concerns regarding cyber security.
In January details emerged of a two-day distributed denial of service (DDoS) attack against Lloyds Bank that left customers unable to access their accounts.
The attack was part of a broader DDoS campaign against a number of UK banks that also affected TSB, Halifax and Bank of Scotland. None of the banks reported the theft of money, although customers suffered disruption to services.
These DDoS attacks were not the first to have targeted a British bank – in January 2016, HSBC was hit by a DDoS attack. The Lloyd’s Bank incident also came just months after the successful hacking of Tesco Bank in November 2016. That attack was said to have cost some £2.5 million.
Such attacks have led to increased concern for the vulnerability of the banking sector to cyber attack. Following the attack against Tesco Bank, the Financial Conduct Authority said that it had concerns with the security of banks due to the complexity of their IT systems.
In January, Richard Benham, Chairman of the National Cyber Management Centre, told the BBC that he believes a major bank could fail in 2017 as a result of a cyber-attack leading to a loss of confidence and a run on that bank.
However DDoS attacks, even when unsuccessful, require considerable resource to prevent or defeat. While successful attacks result in significant business interruption (BI) and have been known to conceal attempts by cyber criminals to steal data or money. Extortion is another motivation behind DDoS attacks.
Deloitte recently warned that DDoS attacks are becoming larger in scale, harder to mitigate and more frequent. It blames the escalation in DDoS attacks on the proliferation of connected devices.
A massive attack against internet infrastructure provider Dyn in October 2016 used over 100,000 botnets and the Internet of Things to cause widespread interruption to services.
As part of the solution, banks are increasingly turning to cyber insurance, which has broadened to include more meaningful BI cover in recent years.
Financial institutions will have limited protection for cyber exposures available to them under their professional indemnity and fidelity coverages. However, we have seen an increased interest by banks in more customised cyber solutions.
Traditional financial institutions policies will have gaps in cyber cover – for example, they will not protect against non-damage business interruption or third party liability losses – but these can be filled with standalone cyber insurance.
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