Securities regulators get serious about cyber security
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If there’s one place where you would expect cyber security to be taken seriously, it’s in an area of the economy where trillions of dollars are potentially at stake. Of course, expectations do not always translate to reality.
But it was encouraging to see last week that the Canadian Securities Administrators (CSA) are making it a priority in their 2016-2019 Business Plan. Louis Morisset, Chair of the CSA and President and CEO of the Autorité des marchés financiers, said that “It is crucial for us to improve collaboration and communication on cyber-security issues with market participants. We want to ensure they are aware of the challenges, have a sufficient level of preparedness, and are as resilient as possible against cyber risks.”
In addition, the CSA – the formal network of all of Canada’s provincial securities regulators – will “hold roundtable sessions with market participants in the coming months to discuss cyber security issues and risks, and the need for coordination and information sharing,” according to the press release.
In a CSA Staff Notice on cyber security updated for the first time since 2013, the CSA states:
The cyber threat landscape is constantly changing as technology advances and business strategies evolve. Given the electronic linkages within the financial system, the impact of a cyber attack can spread quickly, potentially affecting the integrity and efficiency of markets globally as well as trust and confidence in the financial system.
With advancing technology, cyber adversaries are becoming more sophisticated and the potential for damage is ever increasing. The number of entities experiencing financial losses, intellectual property theft, reputational damage, fraud, and legal exposure is rising.
Some studies examining the impact of cyber breaches, such as those released by the Ponemon Institute and PricewaterhouseCoopers, found that:
- In 2015, 38% more cyber security incidents were detected than in 2014; and
- The average total cost of a data breach for the companies participating in the 2016 Ponemon survey stood at USD$4 million.
Given these trends, as well as recent high-profile hacking incidents, authorities globally are considering or implementing various policy responses to encourage Market Participants to improve their cyber defences.
Cyber criminals are getting more sophisticated every day, and the potential cost of breaches are getting larger in the process. By making cyber security a priority, the CSA is making the right move for the sake of the stability of the securities market.
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