2/2/17: FactSet on Five 'Notable' 2016 Corporate Data Breaches

In our recent working paper on the systemic effects of cyber risks expressed via financial markets, we have shown the first empirical evidence of systemic (cross exchanges and cross companies) contagion from cyber risks to share prices of the world’s largest corporates, starting with 2014. You can read the full paper here: http://trueeconomics.blogspot.com/2017/01/23117-regulating-for-cybercrime-hacking.html.

Some new evidence on the effects of cyber crime on corporate performance is now also presented in a recent FactSet analysis here.

In this article, FactSet look at the corporate performance effects arising from five “notable” 2016 data breaches, specifically focusing on the stock performance. The methodology in this analysis, unfortunately, is weak and does not lend itself to establishing any specific hypotheses, including those claimed.

Still, an interesting collection of factoids and illustrations of the shorter term impacts (or lags in such).

24/10/16: Hacktivism on the rise? Welcome to the well-predicted future

Given a rising prevalence and impact of the cyber attacks in recent weeks, here are some slides from my February 2016 course notes on ERM with warnings about the same back at the end 2015 - start of 2016:

13/6/16: Twin Tech Challenge to Traditional Banks

My article for the International Banker looking at the fintech and cybercrime disruption threats to traditional banking models is out.

The long-term fallout from the 2008 global financial crisis created several deep fractures in traditional-banking models. Most of the sectoral attention today has focused on weak operating profits and balance-sheet performance, especially the risks arising from the negative-rates environment and the collapse in yields on traditional assets, such as highly rated sovereign and corporate debt. Second-tier concerns in boardrooms and amidst C-level executives relate to the continuously evolving regulatory and supervisory pressures and rising associated costs. Finally, the anemic dynamics of the global economic recovery are also seen as a key risk to traditional banks’ profitability.

However, from the longer-term perspective, the real risks to the universal banks’ well-established business model come from an entirely distinct direction: the digital-disruption channels that simultaneously put pressure on big banks’ core earnings lines and create ample opportunities for undermining the banking sector’s key unique selling proposition—that is, security of customer funds, data and transactions, and by corollary, enhancing customer loyalty. These channels are FinTech innovations—including rising data intensity of products on offer and technological threats, such as rising risks to cybersecurity. This two-pronged challenge is not unique to the banking sector, but its disruptive potential is a challenge that today’s traditional banking institutions are neither equipped to address nor fully enabled to grasp.

Read more here: Gurdgiev, Constantin, Is the Rise of Financial Digital Disruptors Knocking Traditional Banks Off the Track? (June 13, 2016). International Banker, June 2016. Available at SSRN: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2795113.