Survey: Cybercrimes are the greatest risk to the domestic financial system
The probability of risks of cyberattacks and their potential impact on Lithuania’s financial system is the highest, according to the latest survey of financial institutions, conducted by the Bank of Lithuania. The risk of overheating of the real estate market has lessened somewhat, yet it has also remained among the most important risks to the financial system.
‘These days it has become usual and even necessary for consumers to use financial services online. In this context, financial institutions providing online financial services have to focus in particular on consumer education and cybersecurity so as to provide these services in a safe and reliable manner,’ said Tomas Garbaravičius, Member of the Board of the Bank of Lithuania.
According to the surveyed financial institutions, the probability of risks of cybercrimes, as well as their potential impact on the financial system is the highest, compared to other risks. According to the survey data, in the first half of 2018, four financial institutions out of the 29 surveyed were subjected to cyberattacks, while for one of them these attacks resulted in losses.
The risks of unsustainable development of real estate prices or imbalances in the real estate market have been named as being among the key risks to Lithuania’s financial system as well. However, the risk of overheating of the real estate market has lessened somewhat in the first half 2018, it was the first such half year in the last three years.
Compared to the results of the previous survey, concerns over the real estate market crisis in Scandinavian countries and its potential contagion effects on Lithuania’s financial system has declined slightly. However, this risk has remained among five of the most important risks to Lithuania’s financial system. The risk of snapback in risk premia in global financial markets and the risks of a contraction in Lithuanian exports due to a slowdown of the economic growth of major trading partners are counted among other such risks.
The risk of deterioration in the financial health of households has risen the most in the first half of 2018. Insurance undertakings attached greatest importance to deterioration in the financial health of households or unsustainable credit development.
More than a half of financial institutions surveyed (55%) stated that they assume low rather than high or low risk, while a tenth – high rather than low risk. During the survey conducted half a year earlier, no financial institutions reported assuming high rather than low risk.
The Bank of Lithuania conducts the Survey to assess the views of Lithuania’s financial institutions towards the domestic financial system and likely challenges to its sustainable future development. The survey is conducted on a biannual basis. Banks, insurance undertakings, leasing companies, investment management companies and other financial institutions assess the sources of major risks to Lithuania’s financial system, the probability of adverse events and their potential impact on the domestic financial system over the next 6 months.