Cyber Risk Management in Banks: Cyber Risk Insurance

Cyber Risk Management in Banks: Cyber Risk Insurance

İsmail Yıldırım (Hittite University, Turkey)
DOI: 10.4018/978-1-5225-5927-6.ch003

Abstract

Security vulnerabilities available in cyber security systems lead to virtual and physical damages to financial systems which in turn cause national- and individual-level security issues. Today's world is being shaped by digital technology, and cyber threats to information constitute a significant risk factor for businesses. This study explores the cyber security risks the banking system may encounter. The status of banking system, a system which includes a number of online services, in Turkey with respect to cyber security risks and the current risks are assessed and presented along with possible solutions. This study analyzes e-payment systems (online banking and e-trade/the use of debit/credit cards) and the supply chain, the backbone of the e-finance system, with respect to national cyber security risks. Nevertheless, cyber risk insurance, an emerging tool for cyber risk management, was analyzed in detail.
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Cyber Security Risks

Aon, one of the global leaders in risk management, insurance, reassurance brokerage and human resources consultation, publishes a number of reports annually based on the opinions of specialists, their know-how and research data available. And one of the most important reports is the Global Risk Management Survey. According to the survey made in 2017, “Damage to Reputation/Brand” was listed on top of a list of 10 risks, which emphasizes the need to manage this risk properly in enterprises. Defective products, fraudulent business practices and corruption remained among the major risks threatening a company’s reputation. Cyber risk, on the other hand, was listed in the fifth position.

Key Terms in this Chapter

Information Systems of Legal and Natural Entities: Any information system operated by legal or natural entities based on the laws of the Republic of Turkey.

IT Systems: Also known as Information and communication technologies. This is the system where all process and services are provided.

Hacking: Gaining unauthorized access to confidential data in a system. It is an act of infiltrating into a system bypassing the system admins.

Critical Infrastructure System: Any system which may lead to disruption in the public order, loss of lives, economical damages, etc. if it is compromised.

Cyber Media: The media that is connected to include the IT systems and networks available in the world and the orbit.

State-Owned Information Systems: Any information systems owned by the Turkish state and its enterprises.

National Cyber Media: Any information system operated by legal or natural entities with a national public information system.

Cyber Security Case: Violation of access and confidentiality of information processed on information systems.

Hacker: A person who gains unauthorized access to personal computers or computers and networks of corporations. Simply put, a hacker tries to gain economic benefits using the security weaknesses of the digital world.

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