Central Bank raises cyber-attack concern

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Cyber attacks may present a major threat to this country’s financial stability going forward.

This was one of the concerns raised by Inspector of Financial Institutions Patrick Solomon in the Central Bank of Trinidad and Tobago’s Financial Stability Report 2021.

The report noted, “The continued push for digitalisation to improve access to financial services has also expanded the attack surface for cyber threats in the short term. A rise in cyber incidents domestically and regionally was noted over 2021. Further, recent cyber-attacks on regional conglomerates draw attention to the potential for systemic liquidity risk arising from interconnections within mixed conglomerates and among domestic financial institutions.”

Solomon in his overview said, “ the increasing prevalence of cyber incursions may pose a significant systemic threat going forward.”

He listed it among the key risks being faced by financial institutions as it attempts to navigate a recovery period following the initial shocks of the COVID-19 pandemic.

Solomon said, “Key risks in the regulated domestic financial sector include rising international interest rates, increasing cyber-attacks, and elevated sovereign concentrations in the banking and insurance sectors. The Central Bank’s Monetary Policy Committee will continue to determine the most appropriate policy response to minimise the impact of rising international interest rates, while the Financial Institutions Supervision Department will intensify its focus on ensuring that regulated institutions adhere to robust cybersecurity and risk management procedures.”

This is notable as the report highlighted the fact that digital payment activity continued to expand in both wholesale and retail systems with online and mobile banking channels outpacing cheque payments by an even wider margin in 2021.

Earlier this year and mere weeks apart, Aeropost and Massy Stores were both hit by cyber attacks in Trinidad and Tobago. As a result of the attack on the e-courier, the credit card information of several customers were compromised. The attack on Massy did not see credit card and user data breached, but the supermarket chain was force to close operations at all it stores and discontinue its rewards programme for months.

The Financial stability report also noted despite growth being recorded in the insurance sector, funding has not improved with 65 plans reported deficits at the end of the period.

Government securities and equity dominated the funds asset allocation

The report also noted domestic economic activity was subdued in 2021, but there were early signs of a recovery toward the end of the year.

The report explained the Central Government’s financial position improved during the fiscal year 2020/2021, with the overall deficit narrowing to 8.1 per cent of GDP.