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The regulator has identified weaknesses in the protection of financial institutions.
The European Central Bank (ECB) has completed a large-scale stress test of the cybersecurity of European banks, which began in January 2024. The regulator checked the readiness of financial institutions to withstand serious cyber attacks and recover from them.
The test involved 109 banks under the direct supervision of the ECB. All institutions responded to a special questionnaire and provided documentation for analysis. Additionally, 28 banks underwent a more in-depth audit, including practical testing of IT system recovery with evidence of successful implementation, as well as visits from supervisory authorities.
The stress test scenario assumed a serious but plausible cybersecurity incident: all preventive protection measures were ineffective, and the cyber attack seriously damaged the databases of key bank systems. The main goal was to assess the ability to respond to an attack and recover from an incident.
The results showed that banks generally have the necessary response mechanisms, but there are areas for improvement. The ECB called on banks to improve their business continuity plans in crisis situations, improve communication methods with all stakeholders, and develop more effective strategies for restoring IT systems after cyber attacks. Banks are encouraged to consider a wider range of cyber risk scenarios and better assess their reliance on critical third-party IT service providers.
The regulator notes an increase in the number of cyber incidents in the banking sector. This trend is associated with growing geopolitical tensions and challenges of digitalization.
It is worth noting that conducting such stress tests is a regular practice of the ECB. According to article 100 of the Capital Requirements Directive, supervisory stress tests are conducted annually. Every two years, the ECB participates in a pan-European stress test coordinated by the European Banking Authority. In the remaining years, the ECB organizes targeted stress tests on specific topics.
The ECB stresses that identifying and addressing weaknesses in banks operational resilience systems, including protection against cyber risks, is one of its supervisory priorities for 2024-2026. The results of the stress test will be used in the 2024 Supervisory Review and Evaluation (SREP) process. At the same time, the results of testing will not affect the capital requirements of banks (Pillar 2 Guidance), since the main focus was made on operational aspects.
Supervisors have provided individual feedback to each bank and will work with them to address the identified deficiencies. Some financial institutions have already started to improve their cybersecurity systems or plan to do so in the near future.
The ECB intends to continue working with controlled banks to strengthen their cyber resilience. The regulator will encourage financial institutions to comply with supervisory requirements, including adequate business continuity, communication and recovery plans.
Source
The European Central Bank (ECB) has completed a large-scale stress test of the cybersecurity of European banks, which began in January 2024. The regulator checked the readiness of financial institutions to withstand serious cyber attacks and recover from them.
The test involved 109 banks under the direct supervision of the ECB. All institutions responded to a special questionnaire and provided documentation for analysis. Additionally, 28 banks underwent a more in-depth audit, including practical testing of IT system recovery with evidence of successful implementation, as well as visits from supervisory authorities.
The stress test scenario assumed a serious but plausible cybersecurity incident: all preventive protection measures were ineffective, and the cyber attack seriously damaged the databases of key bank systems. The main goal was to assess the ability to respond to an attack and recover from an incident.
The results showed that banks generally have the necessary response mechanisms, but there are areas for improvement. The ECB called on banks to improve their business continuity plans in crisis situations, improve communication methods with all stakeholders, and develop more effective strategies for restoring IT systems after cyber attacks. Banks are encouraged to consider a wider range of cyber risk scenarios and better assess their reliance on critical third-party IT service providers.
The regulator notes an increase in the number of cyber incidents in the banking sector. This trend is associated with growing geopolitical tensions and challenges of digitalization.
It is worth noting that conducting such stress tests is a regular practice of the ECB. According to article 100 of the Capital Requirements Directive, supervisory stress tests are conducted annually. Every two years, the ECB participates in a pan-European stress test coordinated by the European Banking Authority. In the remaining years, the ECB organizes targeted stress tests on specific topics.
The ECB stresses that identifying and addressing weaknesses in banks operational resilience systems, including protection against cyber risks, is one of its supervisory priorities for 2024-2026. The results of the stress test will be used in the 2024 Supervisory Review and Evaluation (SREP) process. At the same time, the results of testing will not affect the capital requirements of banks (Pillar 2 Guidance), since the main focus was made on operational aspects.
Supervisors have provided individual feedback to each bank and will work with them to address the identified deficiencies. Some financial institutions have already started to improve their cybersecurity systems or plan to do so in the near future.
The ECB intends to continue working with controlled banks to strengthen their cyber resilience. The regulator will encourage financial institutions to comply with supervisory requirements, including adequate business continuity, communication and recovery plans.
Source
