Summary of The Future of Financial Stability and Cyber Risk

Looking for the report?
We have the summary! Get the key insights in just 5 minutes.

The Future of Financial Stability and Cyber Risk summary
Start getting smarter:
or see our plans

Rating

8 Overall

9 Importance

8 Innovation

7 Style


Recommendation

Cyberrisks are insidious threats that could accelerate cascading systemic shocks to the global financial system. These attacks seem to come with greater frequency and sophistication, continually raising the learning curve for those who seek to contain them. This noteworthy analysis from financial experts in academia and finance addresses a topic of universal relevance and makes for required reading for policy makers, executives and IT professionals.

In this summary, you will learn

  • How the usual vulnerabilities can spark global financial chaos,
  • What makes cyberrisks unique, and
  • Why policy experts and industry leaders need to coordinate their efforts to combat cyberthreats to the global financial system.
 

About the Authors

Jason HealeyPatricia Mosser and Katheryn Rosen are with the Columbia University School of International and Public Affairs. Adriana Tache is a vice president at the Citi Fraud Fusion Center.

 

Summary

Threats to the financial system extend beyond the three traditional risks that can cause chaos in an economy: “leverage, maturity and risk transformation” and the “procyclicality of the price of risk.” As to the first peril, high levels of indebtedness can hobble financial institutions’ ability to shoulder losses when asset values shrink, magnifying the risk of failure. Regarding the second, an unexpected price drop during the conversion of “risky, illiquid assets” such as subprime mortgages into instruments that offer greater liquidity can weaken banks and the entire financial ecosystem. The third danger amplifies price ups and downs; for example, declining asset prices impair borrowers’ collateral, raising their cost of borrowing and pushing prices ever lower in a downward spiral.


More on this topic

Customers who read this summary also read

The End of Alchemy
The End of Alchemy
7
Cables, Sharks and Servers
Cables, Sharks and Servers
8
The Forgotten History of the Financial Crisis
The Forgotten History of the Financial Crisis
9
Financial Stability a Decade After the Onset of the Crisis
Financial Stability a Decade After the Onset of the Crisis
8
The Road to Action
The Road to Action
8
Why Wall Street Matters
Why Wall Street Matters
7

Related Channels

Comment on this summary