When a Big Cyberattack Comes, Will Banks Be Covered?

American Banker

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PUBLISHED ON: June 4, 2014

Cyberattacks are a major operational risk for the financial sector of the economy, according to the Financial Stability Oversight Council's 2014 annual report. A massive cyberattack could "undermine the confidence of consumers and investors, and ultimately, threaten the stability of the financial system," according to the report. Because of the financial industry's increasing dependence on other sectors, "including energy, transportation and telecommunications," banks are vulnerable to both direct cyberattacks and attacks on companies in other industries. Last year's Target data breach offers one compelling example of how a cyberattack outside the financial industry can lead banks to suffer big losses.

Given the likelihood of even bigger and more catastrophic cyberattacks in the future, a growing number of banks are buying insurance policies to cover such an event. But if and when that day comes, insurance companies may not be ready to pay up.

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