As Cyber Attacks Rise, 85% of Central Banks Are Conducting Cyber Risk Exercises

Most central banks are preparing to handle the increased frequency of cyber attacks as they are conducting cyber risk exercises regularly, according to a Central Banking report.

The Financial Stability Benchmarks 2024 report revealed 85% of central banks actively engage in cyber risk exercises, whereas only five jurisdictions have not yet implemented such exercises.

Even though most central banks conduct cyber risk exercises, there is still room for improvement as 86% of central banks reported that they believe their exercises can be improved to further strengthen their resilience against cyber attacks.

To improve the effectiveness of their exercises, the report recommended several adjustments, including updating banks’ approaches, increasing the frequency of exercises and implementing more training and regular drills for staff.

The emphasis on cyber risk exercises follows an increase in the number of cyber-attacks across the financial sectors of most countries over the past two years.

The report found that 27 out of the 32 jurisdictions surveyed experienced a rise in cyber attacks. These findings closely aligned with those from last year’s benchmark.

While many countries are enhancing their resilience through cyber risk exercises, the report also indicated that most are not taking additional steps to strengthen their defenses by participating in stress tests carried out by supra-national regulators.

The majority (68%) of countries reported they had not engaged in stress tests of lenders performed by a supra-national regulator.

The gap is even more pronounced among middle-income central banks, with those from middle-income countries being less likely to participate in stress tests compared to their upper-middle-income counterparts.