PremiumMumbai: The banking sector is becoming more exposed to cybercrime after the covid-19 pandemic accelerated digitalization and remote working, which could lead to more rating actions, S&P Global Ratings said in a report on Tuesday.
"Cyberattacks have had only a limited effect on bank ratings to date but could trigger more rating actions in the future as cyber incidents become more frequent and complex," said S&P Global Ratings credit analyst Irina Velieva.
Cyberattacks can harm credit ratings, mainly through reputational damage and potential monetary losses. Banks and other financial institutions are attractive targets for cyber criminals because they possess valuable personal data and play a critical role in servicing particular financial or economic needs and segments, it said. Institutions with weak risk governance are less prepared for, and therefore more vulnerable to cyberattacks.
S&P Global Ratings attempted to understandhow a financial institution manages its cyber risk exposure and how it would act after a potential attack to limit the damage.
“Although it is crucial to learn from previous attacks and strengthen cyber-risk frameworks in real time, the appropriate detection and remediation of attacks takes precedence because the nature of threats will continue to evolve," it said.
The rating agency believes cyber defence will become an increasingly important part of entities' general risk management and governance frameworks, in need of increasing spending and more sophisticated tools.
“We acknowledge, however, that this might not be straightforward for many entities, especially the ones with weaker risk-control frameworks and insufficient budget allocated for cyber defence," the report said.
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