With the recent reporting that the Trump administration and the Russian government may team up to share cybersecurity methods, potentially revealing state secrets to a hostile power, Americans received yet another reminder of the many and varied cybersecurity threats we face.
Yet, as is too common in Washington, policy makers seem to be fighting last year’s war.
While it is good that attention is starting to be paid to the cybersecurity vulnerabilities of our government and elections systems, they are far from the only critical networked system of our society vulnerable to hacking.
Right now, there is particular reason to be worried about the safety and stability of our financial system, especially our financial markets.
Most Americans probably still visualize our financial markets as a number of men in jackets yelling orders in a windowless building on Wall Street. This image is an anachronism. Nearly all trading now occurs electronically, largely via algorithms, and many of the trading floors are now deserted. Thanks to electronic trading, investors now have greater and faster access to financial markets than at any time in history.
By making it possible for anyone to trade on our financial markets, however, we have inherently created countless access points, making those markets more vulnerable to hackers. These vulnerabilities allow online financial predators to target everyone, from the average person using a online trading account to sophisticated investors that utilize algorithmic trading in tandem with direct electronic access to financial market systems, the latter being popularly known as high-frequency traders.
The threats posed to our financial markets by hackers have not gone entirely unnoticed by the industry. In fact, about 40% of large financial firms annually budget $10 million or more for information security.
Yet, many financial firms do not appear to have adequate cybersecurity protections.
As one panel of experts said last fall, many financial advisers are not only unaware of technology threats, but are almost casually oblivious…
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