RBI Deputy Governor Stresses Need For Proactive Cyberattack Risk Mitigation

RBI Deputy Governor Swaminathan J highlighted the critical importance of proactive risk mitigation strategies in combating cybersecurity threats in the banking sector. Speaking at the Conference of Heads of Assurance of Urban Cooperative Banks, he emphasized that the potential impact of a cyberattack on a bank’s operations, reputation, and financial stability cannot be overstated. In the evolving banking landscape, new risks like cybersecurity threats and operational disruptions constantly emerge alongside traditional risks such as credit, market, and liquidity risks.

The proliferation of digital technologies and the interconnected nature of financial systems have exposed banks to various cyber threats, including data breaches and malicious ransomware attacks. Swaminathan stressed the necessity of robust cybersecurity measures and proactive risk mitigation strategies to safeguard against these threats. He highlighted the shift in regulatory and supervisory focus towards activity-based oversight, ensuring that similar activities with similar risks receive consistent regulatory scrutiny, tailored to the scale and complexity of operations.

Furthermore, Swaminathan underscored the increasing expectations for Urban Cooperative Banks regarding corporate governance and the effectiveness of assurance functions. He emphasized the crucial roles of risk management, internal audit, and compliance functions in ensuring the bank’s safe and ethical operations within regulatory boundaries. By functioning as effective gatekeepers, these assurance functionaries play a vital role in maintaining the bank’s reputation, upholding trust among stakeholders, and detecting and preventing potential risks. Swaminathan emphasized the importance of independence in effective assurance functions, highlighting existing regulations that ensure adequate stature, direct reporting lines, and prevent conflicts of interest among assurance personnel.

Source – NDTV Profit