What’s the back up? - Editor's Blog -

This headline is probably the most asked question in banking today. The quality of the reply separates the banks that will survive in the cyber-security era from those that will not, writes Brian Caplen.

Cyber security has become the number one worry for senior managers in banks. To the fear of a criminal attack has been added the threat of a hack by a foreign government that could bring down an entire financial system.

Then there are concerns that a supplier or correspondent could be the weak link that lets the fraudsters in.

But after straightening out the frontlines of defence in cyber risk management the next big question is: how does the bank recover from an attack? These days, if middle managers are presenting to their seniors and cannot answer the ‘What’s the back up?’ question their career prospects are likely to be meagre.

Successful recovery from a cyberattack will depend on how well this question has been answered and how much time and energy has been devoted to building resilience. The cyber resilience challenge is compounded by the inevitable moving of customer and bank data to public and hybrid cloud as a way of reaping the rewards of scale that are not available with private cloud. The worst scenario is to have problems when data is concentrated in a single location with a single provider. A bank in this situation certainly did not address the back-up question properly.

Regulators are also spending a lot more of their time looking at recovery issues. But despite the best efforts of both the banks and the regulators there will undoubtedly be some learning the hard way. Banks that can avoid this by having robust back-up systems in place will be tomorrow’s winners.

Brian Caplen is the editor of The Banker. Follow him on Twitter @BrianCaplen

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