Cyber Attacks on Banks Color Terrorism Insurance Renewal Debate Bloomberg (09/01/14) Dougherty, Carter; Tracer, Zachary; Son, Hugh U.S. Treasury officials have indicated to bank insurers that should a cataclysmic hacking attack on the U.S. financial systems computer networks occur, the government could activate a government backstop that does not explicitly cover electronic intrusions. While consumers may not lose money to the attacks, taxpayers could be on the hook for the losses. Risk Management Association General Counsel Edward DeMarco said that the recent attack on J.P. Morgan was limited in scope, but it underscores the evolution of cyber assaults, some of which have become more political. He warns that a worst-case scenario would destroy records, drain accounts, and freeze networks, harming the economy on the scale of the 2001 terrorist attacks, but the government response could be akin to that of the 2008 financial crisis. Meanwhile, banks would be forced to tap their reserves and private insurance to cover claims. Regulators continue to pressure financial firms, broker-dealers, and hedge funds to report intrusions and demonstrate cyber security improvements. The governments role in the matter has played a role in discussions about extending the Terrorism Risk Insurance Act and clarifications to the Stafford Act, the main statute for relief from natural disasters. Dan Watson, a spokesman for FEMA, said that the Stafford Act is intended to be flexible.
Posted on: Tue, 02 Sep 2014 17:25:07 +0000
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