Prominent cyber-attacks this year have highlighted how vulnerable major companies are to hacking

New York financial regulator fears systemic cyber-attack

A major cyber-attack on the financial system is one thing that keeps New York's financial regulator awake at night, an audience in Manhattan heard.

Cyber-terrorism is "the most significant issue DFS (Department of Financial Services) will work on in the next year", Benjamin Lawsky, superintendent of the DFS for the state of New York said, speaking at a Bloomberg Markets event at the Museum of Jewish Heritage in lower Manhattan.

"It is impossible to take it seriously enough," he said, vowing that cyber-security will be the major focus for his agency over the coming year.

A report earlier this year by DFS on cyber security in the banking sector found that most institutions surveyed have come under cyber-attack at some point in the past three years, irrespective of the institutions' sizes, highlighting how prevalent an issue hacking has become.

There were a series of prominent cyber-attacks this year – Home Depot revealed some 56 million payment cards were likely compromised in a cyber-attack at its stores this month, dwarfing another recent high-profile attack at retailer Target.

JPMorgan Chase & Co also said last month that it is investigating a possible cyber-attack and working with law enforcement authorities to determine the scope.

"I worry that we're going to have some major cyber event in the financial system that's going to cause us all to shudder," said Lawsky, who regulates both banks and insurance companies.

Lawsky noted that, while there's a role for policy makers and legislators to address the issue, the public sector also may be able to prod the private sector to take steps to better handle the risk.

"We need to think about ways to incentivise the market participants to do more to protect themselves from attacks," Lawsky said.

He noted the rising market for cyber-attack insurance, still in its relative infancy. That, in turn, could help companies improve their internal systems to fight such breaches, as those efforts could help them secure policies.

"It's a bargain if we harden our systems now and protect against something more catastrophic," Lawsky said at the event last night. "It is a great deal in my view. Once there is major event, everyone suffers. We're going to pay for it either now or then."

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