The Reserve Bank estimates cyber attacks could have significant financial impact on economy

Cyber security - laptop
Cyber attacks are likely to affect profits within the banking and insurance sectors, RBNZ says. Photo credit: Getty.

New Zealand’s central bank said on Tuesday that cyber attacks could wipe off about 2 to 3 percent of the profits of the banking and insurance industries each year, highlighting the need for the industry to counter these threats.

Cyber attacks could cost an average of NZ$104 million ($66 million) for the banking sector and NZ$38 million ($24 million) for the insurance sector annually, the Reserve Bank of New Zealand estimated in a research bulletin published on Tuesday.

This was equivalent to 2 to 3 percent of annual profits for the two industries, the report said.

The estimate model also indicated that in any given year there is a 5 percent chance of costs exceeding NZ$2.3 billion a year.

“While that may sound manageable, these are annual costs and the cumulative impact over a five or ten-year horizon would be significant,” the reports said.

The state cyber security agency, CERT NZ, found that more than 60 percent of the cyber attacks on New Zealand organizations in 2018 targeted firms in the financial and insurance services sector, the report said.

“With the frequency and severity of cyber security incidents on the rise, the study highlights the importance of the financial sector remaining vigilant and managing cyber risks effectively,” the Reserve Bank of New Zealand (RBNZ) said.

RBNZ said it was strengthening efforts to enhance the resilience of the financial system, including developing risk management guidance and promoting information-sharing in collaboration with industry and other public organisations.