Report
When It Rains, It Pours: Cyber Risk and Financial Conditions
Abstract: We analyze how systemic cyber risk relates to the financial cycle and show that the potential impact of a cyber attack is systematically greater during stressed financial conditions. This is true over the past two decades and particularly at the onset of the COVID-19 pandemic, when changes in payment activity increased vulnerability by approximately 50 percent relative to the rest of 2020 through more concentration and intraday liquidity stress. We evaluate the effectiveness of policy interventions used to stabilize markets at mitigating cyber vulnerability. We argue that cyber and other financial shocks cannot be treated as uncorrelated vulnerabilities and policy solutions for cyber need to be calibrated for adverse financial conditions.
Keywords: cyber; banks; networks; payments; COVID-19;
JEL Classification: G12; G21; G28;
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Bibliographic Information
Provider: Federal Reserve Bank of New York
Part of Series: Staff Reports
Publication Date: 2022-06-01
Number: 1022
Note: Revised August 2023.