Cyber security risks present threat to UK financial system, say growing number of companies

Out-Law News | 18 Jun 2013 | 4:13 pm | 1 min. read

A growing number of companies in the financial services sector are expressing concern about risks to cyber security, according to a Bank of England (BoE) survey.

The BoE said that it had identified a spike in the number of financial services companies concerned about the risk presented to the UK's financial system by cyber security threats. It detailed findings from its System Risk Survey, (9-page / 152KB PDF) a biannual study aimed at gathering the views of the financial services companies on "risks to, and their confidence in, the UK financial system".

"Perceptions of operational risk ... rose to their highest level since the survey began," the BoE said in its survey report. "The risk was cited by 24% of respondents, up 10 percentage points since October 2012. The threat of 'cyber' attacks was the most commonly mentioned specific risk in this category."

The threat of an economic downturn and risks around the issue of sovereignty were identified as the two most popularly cited risks to the UK financial system, with 79% and 76% of respondents raising concerns about those risks, according to the report. Sovereign risk was deemed to be the most difficult risk for financial services companies to manage.

According to the report, 17% of respondents said they were either completely confident or very confident about how stable the UK financial system will be in the next three years, whilst 70% said they were fairly confident and 13% not very confident.

The BoE's report was based on 76 responses to its survey, which it said were generally answered by executives responsible for risk management at banks, building societies, insurance firms and asset management companies, among other financial services institutions.

Earlier this year the now-defunct City regulator, the Financial Services Authority, led a "benchmarking programme" which involved assessing the "cyber and technology practices" of 30 major financial institutions in the UK.