Europe’s financial institutions have been urged by regulators to makes themselves more resilient to a growing risk of cyber security that has been intensified by war and has stalled the economic recovery from Covid.A joint report issued by the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority highlighted “environmental risks and risks stemming from digitalisation” as additional vulnerabilities for the financial system that have built up over time and have been exacerbated by the Russian invasion of Ukraine.
The European supervisory authorities’ (ESA’s) report calls for national regulators, financial institutions and market participants to “strengthen their cyber resilience” in the face of an “elevated level and frequency” of cyber incidents.
“Geopolitical tensions are playing an increasing role in the technological and digital space, with impacts felt across geographies and sectors, and heightened cyber risks following the Russian invasion in Ukraine,” states the report.
“Moreover, the COVID-19 pandemic contributed to a rapid increase in connectivity and further reliance on technology highlighting the importance of preparedness and response in the event of a crossborder cyber-incident.”
Given this context, the ESAs have welcomed the European Systemic Risk Board’s proposal to establish a pan-European cyber incident coordination framework for regulators in the event of a major cross-border cyber incident.
In addition, the report also references ongoing legislative developments in terms of Digital Operational Resilience Act which is designed to improve cyber security practices among Europe’s financial institutions and entered the trilogue phase2 stage in January 2022.