(Repeats story published earlier. No change to text. The author
is editor-at-large for finance and markets at Reuters News. Any
views expressed here are his own)
LONDON, June 11 (Reuters) - A surge in cyber attacks and
ransomware hacks since the start of pandemic lockdowns is
alarming for a world of finance moving headlong into digital
money and remote working longer term.
The flipside of the digital revolution has always been the
inevitable rise in its alter ego of online crime - aping the
much-vaunted global reach and potential anonymity of the web
and leaching off lax corporate and consumer security.
Some attackers are clearly suspected of being state
sponsored, with political motives. But others are simply hyper
sophisticated organised gangs such as DarkSide.
The remote working boom during the pandemic has seen a surge
in such cyber raids and disruptions on companies, banks and
government bodies. Victims this past month alone include
Colonial Pipeline, Brazilian meatpacker JBS
and Ireland's national health service.
Ransomware criminals collected almost $350 million last
year, up threefold from 2019, according to members of a
public-private group called the Ransomware Task Force.
That seems a modest total in global terms but the disruption
caused in lost business or public services and the massive
spending on cybersecurity defences will be many multiples of
that. U.S. government estimates put the bill from attacks such
as 2017's WannaCry hit, blamed on North Korea and targetting
hospitals and banks worldwide, into billions of dollars.
Citing different tech industry sources, Fitch credit ratings
firm reckons ransomware attacks in particular jumped almost 500%
in 2020 - with a quarter of all cyber incidents in legal and
finance firms and with global costs estimated at $20 billion.
Before the pandemic even hit, the World Economic Forum (WEF)
estimated the scale of disruption from cyber crime of all types
was running into trillions of dollars.
The WEF's annual risks report this year had "cybersecurity
failure" in the Top 10 Global Risks "by likelihood" - with
"extreme weather" and "climate action failure" the top two. And
almost 40% of its members saw cyber risks as a "clear and
present danger" to the world economy over the next two years.
Washington's Center for Strategic and International Studies,
meantime, documented more than 100 cross-border cyber attacks on
governments and corporations worldwide last year alone.
DIFFERENT KIND OF VIRUS
But individual corporate risk and loss of data is different
from fears of lifelong savings or investments being stolen.
S&P Global ratings firm said banks are key targets as direct
sources of finance, because of their key infrastructure role and
also their possession of a wide range of sensitive personal
"Accelerated digitalization and remote working arrangements
have increased the financial sector's exposure to cyber risks
and could lead to more complex cyber attacks that trigger higher
losses," it said, citing poor governance as the big
vulnerability and mid-sized U.S. banks with annual revenues of
between $10-50 billion as most targeted.
The scale of this problem is clearly multiplying as fast as
the digital world itself - and similarly catalysed by the
But the additional threat to finance is a huge issue as
central banks and governments move into digital money,
attempting in part to reclaim the digital money world from
cryptocurrencies that have already proven prone to hacking and
The mooted rollout of central bank digital currencies
(CBDCs) as legal tender over the coming years ups the ante
considerably in securing new money. China is already piloting
the digital yuan and the European Central Bank said on Thursday
it would decide next month on the go-ahead for cyber euro.
"The increased number of central bank touch-points into the
economy and the danger of hackers usurping central banks role
in money creation means the rollout of CBDCs will increase
cybersecurity risks," wrote Fitch analysts Monsur Hussain and
Duncan Innes-Ker last month.
The flipside of this enormous potential risk to tens of
trillions of dollars worth of CBDCs replacing physical cash
around the world is simply ever greater centralised spending on
cybersecurity and innovation to keep it safe.
And it's this trend that some asset managers have already
"Cybersecurity will be key in enabling 'The Next Big Thing'
themes," UBS Global Wealth Management's Chief Investment Officer
Mark Haefele wrote last week.
UBS said the size of the global cybersecurity market was
some $148 billion last year, growing at an annual clip of about
8% in recent years and set to accelerate to at least 10%. And it
fitted neatly into portfolios right now as a 'defensive'
position within the pricey tech sector, it added.
If digitization of the world economy is inevitable, then
keeping it safe will be paramount. This virus risk may not match
the disruption of COVID-19 just yet, but investing in equivalent
cyber vaccines may be lucrative nonetheless.
(by Mike Dolan, Twitter: @reutersMikeD
Editing by Mark Potter)