How to tackle evolving cyber threats with innovative risk management

cyber risk management

As technology evolves, so does the network of bad actors who take advantage of it for illicit gains, leaving governments scrambling to modernise the way they regulate criminal activity. Governments and regulators find themselves engaged in a digital war against bad actors to regulate and monitor rapidly changing trends and technologies.

According to Moody’s, in the wake of the digital revolution, the global landscape has witnessed an unprecedented surge in cybercrime, reshaping the paradigms of security and risk management. Since 2016, malicious cyber activities have surged, propelled by the increasing sophistication of cybercriminals and the rapid expansion of digital infrastructure.

ECrime – criminal activities that involve computers or the internet – was deemed the most persuasive threat across the 2023 cyber landscape according to the 2024 Global Threat Report by cybersecurity firm CrowdStrike.

Other 2023 themes included identity-based threats, social engineering, and exploitation of third-party relationships. The report also highlighted emerging risks like generative AI (artificial intelligence), which could lower the barrier for entry to cybercrime.

The escalation in malicious cyber activities underscores the pressing need for robust cybersecurity measures and proactive risk mitigation strategies. Cybersecurity Ventures, a leading researcher and publisher covering the global cyber economy, estimates cybercrime costs will grow by 15% annually over the next five years, reaching $10.5 trillion by 2025.

The advent of the digital age catalysed a wholesale shift in criminal activities, with traditional offences being redefined and amplified through the use of information communication technology (ICT). Cyber-enabled crimes, encompassing a spectrum of illicit activities ranging from harassment to extortion, have proliferated in both frequency and severity.

Unlike cyber-dependent crimes or fraud, these offences can transpire even in the absence of ICT but are exponentially magnified when technology is involved. This convergence of traditional crimes with digital platforms has blurred the boundaries of physical and virtual worlds, presenting a myriad of challenges for law enforcement agencies and regulatory bodies.

The pervasive nature of cybercrimes poses an existential threat to the security and integrity of individuals, organisations, and economies worldwide. By infiltrating and illicitly acquiring sensitive assets such as financial resources, intellectual property, and personally identifiable information (PII), cybercriminals undermine individual privacy and the economic stability of entire sectors and nations.

The ripple effects of cyberattacks reverberate across all sectors, ranging from banking and finance to healthcare and critical infrastructure, amplifying the magnitude of their impact. Moreover, the rise of ransomware attacks and data breaches has engendered a climate of fear and mistrust, eroding public confidence in digital ecosystems and impeding socio-economic progress.

Cybercriminals, as highlighted by the Federal Bureau of Investigation (FBI), exploit vulnerabilities in US networks, perpetrating theft of financial and intellectual property while jeopardising critical infrastructure with impunity.

The United Kingdom National Health Service Counter Fraud Authority defines cyber fraud as financially motivated cybercrime, resulting in fraudulent activities. And the healthcare industry remains a prime target due to the lucrative nature of medical data on the dark web. The Federal Trade Commission reports a staggering $8bn lost to fraud in 2022, with identity theft constituting a significant portion of over one million reported cases.

Common cybercrimes include business email compromise (BEC), identity theft, spoofing and phishing, online predation, elder fraud, romance scams, and ransomware attacks, each posing unique threats to individuals and organisations alike. The cost of cyberattacks is staggering, with data breaches reaching unprecedented levels of financial impact. According to IBM’s Cost of a Data Breach report, 2023 saw a global average breach cost of $4.45m, with US-based companies facing costs exceeding $10m.

Deloitte highlights the exacerbated risks in the post-pandemic landscape, with increased use of personal devices for business purposes and vulnerabilities in remote work setups. The ACAMS 2022 Global Ransomware Risks Survey reveals a growing threat perception, with 65% of respondents viewing ransomware as a significant concern. Cybercriminals are evolving their tactics, leveraging ransomware-as-a-service (RaaS) and targeting software supply chains to maximise victim count.

As defenders become more adept, attackers innovate, reducing the average completion time of ransomware attacks and increasingly using backdoor access to disrupt systems. Case studies underscore the real-world impact of these cyber threats on businesses, highlighting the urgent need for comprehensive cybersecurity measures.

Moody’s screening database highlights this increase by the number of profiles added annually for cybercrimes including cyberstalking, hacking, phishing, internet swindles, and cybercurrency-related crimes. The volume of profiles in our database with cyber-related risk has nearly doubled since 2020.

In response to the escalating threat posed by cybercrimes, governments and regulatory bodies worldwide have intensified efforts to bolster cybersecurity frameworks and enact stringent regulations.

The global cyber regulatory landscape is characterised by a diverse range of policies, directives, and standards aimed at mitigating cyber risks and promoting resilience across industries.

In addition to leveraging cyber risk analytics as an early warning signal, the data can also be deployed as a low-latency proxy for broader corporate governance and technology management.

Cybersecurity maturity can be seen as a unique proxy for corporate governance and a positive indicator of effective systems and risk management. Organisations that make strategic investments in people, systems, and internal procedures to effectively manage cybersecurity are likely to be more capable of effective business management overall.

Copyright © 2024 RegTech Analyst

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