Cybersecurity: The key to sustainable growth in the securities Industry

Digitization is driving significant changes in the securities industry, bringing numerous benefits while also presenting considerable challenges for businesses operating in this field.

Benefits of Digitization

Digitization has brought significant benefits to the financial market, particularly in enhancing transaction efficiency and transparency. According to a report by the International Data Corporation (IDC), the adoption of digital technology, along with technological solutions that optimize performance in financial transactions, has helped reduce operational costs by up to 30% and shorten transaction processing time by 50%.

Specifically, online trading platforms allow investors to execute transactions anytime, anywhere, with significantly improved order matching speeds. This not only increases market liquidity but also opens up opportunities for individual investors to access a more diverse range of financial products. Additionally, the rapid and transparent disclosure of market information on digital platforms has played a crucial role in improving the quality of investment decision-making.

Risks of Digitization

According to a report by Cybersecurity Ventures, global damages from cybercrime are projected to increase from $3 trillion in 2015 to $10.5 trillion by 2025. Financial exchanges, which hold vast amounts of sensitive customer and transaction data, have become attractive targets for cyberattacks.

The increasing reliance on technology by financial exchanges has opened the door to numerous potential risks. Hackers can exploit security vulnerabilities to steal sensitive data, causing significant damage to investors and businesses. Sophisticated cyberattacks can cripple trading systems, leading to market chaos. Additionally, technology facilitates fraudulent activities such as stock price manipulation and insider trading, making them more sophisticated and harder to detect. Even minor technical glitches can lead to significant disruptions due to over-reliance on technological systems.

To address these challenges, financial exchanges must invest heavily in cybersecurity systems, develop robust risk management processes, and regularly update their knowledge of emerging threats. Collaboration with cybersecurity experts and regulatory authorities also plays a crucial role in ensuring the safety of trading activities and protecting investor interests.

Cyberattacks pose not only a threat to individual businesses but also can lead to significant repercussions for the entire securities industry.

Cyberattacks cause a decline in stock prices

A 2022 study by Sustainalytics has highlighted significant negative impacts of serious cyberattacks on stock prices. Analyzing data from 69 cyber incidents with high risk levels, the study indicates that the stock prices of companies affected by these attacks decreased by an average of 2.3% within 4 days of the incident and continued to decline to 4.6% after 60 days.

Furthermore, by the end of the year following the attacks, the stock values still showed an average decrease of 0.65% compared to the market's average growth rate of 8.47%. This demonstrates that cyberattacks not only cause immediate damages but can also have long-term implications on a company's valuation.

Study results: Impact of cyberattacks on the stock market

The impact of cyberattacks on the stock market varies by country and region

The study 'The Impact of Data Breaches on Stock Performance 2019' has demonstrated that the impact of cyberattacks on the stock market is not uniform but varies depending on each country and specific context. For companies in the UK, stock prices typically decrease by an average of 0.77% immediately after the disclosure of a cyberattack. In contrast, in France and Germany, cyberattacks not only reduce stock prices but also immediately turn average company profits negative.

This illustrates the varying sensitivity of investors to cybersecurity incidents across markets, where market reactions are influenced by factors such as the severity of the attack, the information disclosed, and the general economic environment.

Tech companies are often seriously affected

Although data breach disclosures do not always cause significant stock price fluctuations, the real-world consequences for businesses can be severe. Cases like Equifax and ADP demonstrate that losing customers and facing legal penalties after data breaches can result in substantial financial damage. In particular, technology companies often experience more severe impacts and require significant time to regain trust from customers and partners.

Market capitalization of technology companies following ransomware breach disclosures

Furthermore, ransomware attacks can also lead to significant market capitalization fluctuations. The impact and recovery ability of businesses depend on various factors, including the scale and nature of the attack, as well as the cybersecurity measures the company has implemented. This underscores the importance of investing in cybersecurity to protect the assets and reputation of businesses in the digital age.

DDoS attack targeting the NZX stock exchange in New Zealand caused trading to be temporarily suspended for 3 days

Cyberattacks not only directly harm companies but can also target stock exchanges, causing serious consequences for the entire market. The objective of these attacks is often to disrupt trading activities, manipulate systems, thereby eroding investor confidence and causing sharp declines in stock prices. A prominent example is the Distributed Denial of Service (DDoS) attack on the New Zealand Stock Exchange (NZX) in August 2020. This attack forced the exchange to halt operations for three days, resulting in significant loss of trading time and opportunities for investors. Additionally, NZX faced trading volume issues and was unable to settle securities transactions and bonds during that month.

Furthermore, the attack severely damaged NZX's reputation, leading to negative public and expert commentary. A report by the Financial Markets Authority (FMA) subsequently highlighted NZX's inadequate technological resources and insufficient information security, citing weak network architecture and incomplete infrastructure protection.

Further reading: Comprehensive cybersecurity trends in combating DDoS attacks in 2024.

The ransomware attack caused VNDirect to lose nearly 1,800 billion Vietnamese dong in market capitalization

At the end of March 2024, a serious cyber attack targeting VNDirect Securities Company caused a significant shock in the Vietnamese financial market. This incident rendered VNDirect's system unable to connect to the stock exchange, resulting in the company's stocks continuously declining for 6 sessions, equivalent to 1,450 VND per share. With over 1.2 billion shares in circulation, VNDirect lost nearly 1,800 billion VND in market capitalization.

Experts assess this event as one of the most serious cyber attacks in the history of Vietnam's securities industry, causing severe damage not only to VNDirect but also shaking investor confidence. Furthermore, this incident serves as a warning bell regarding cybersecurity in domestic financial and securities enterprises, demanding comprehensive and effective measures to remedy and upgrade information security systems.

For more information: 7 strategies to proactively defend against ransomware attacks.

The email-based attack caused SolarWinds' stock to drop by 23%

The large-scale cyber attack targeting SolarWinds, a technology company providing system management software, sent shockwaves globally in 2020. The attackers exploited SolarWinds' software update to infiltrate the email systems of numerous critical clients, including U.S. government agencies such as the Department of Commerce and the Department of Treasury. This incident resulted in serious consequences, damaging not only SolarWinds' reputation but also causing the company's stock price to plummet by 23%. Regarded as one of the largest and most sophisticated cyber attacks in history, it raised significant concerns about global cybersecurity.

Stock Price Fluctuation of SolarWinds Following the Cyberattack in December 2020

The securities industry plays a crucial role in the global economy, making it a prime target for sophisticated cyberattacks. Understanding the motivations behind these attacks is essential for preventing and mitigating risks to investors and the broader economy. The primary motives driving cyberattacks in the securities industry include:

• Financial Gain: This is a major driving force behind many cyberattacks. Attackers seek to profit by manipulating stock prices or other assets through market manipulation attacks. Small firms with limited cybersecurity investment are often more vulnerable to these attacks and fraudulent activities.
• Political Objectives: Cyberattacks on the securities industry can also be linked to political goals. Attackers may carry out attacks to create economic instability or weaken a particular government.
• Revenge: This can be a personal motivation. Attackers may target stock exchanges to recoup previous financial losses or harm competitors.
• Threats and Extortion: Attackers may orchestrate securities market attacks to threaten or extort financial institutions or investors, often involving ransom demands.

Digitalization brings many benefits to the securities industry, but it also comes with risks that need to be addressed and resolved. In addition to cooperation and raising cybersecurity awareness among stakeholders such as the government, financial institutions, and investors, businesses also need to ensure cybersecurity to promote safe and effective digitalization, contributing to the development of a sustainable and transparent securities market.

Addressing the growing concerns of businesses amidst the escalating sophistication of cyberattacks, VNETWORK introduces its VNIS platform – a comprehensive Web/App/API security solution tailored to safeguard the systems and data of securities firms.

VNIS effectively mitigates Layer 3/4/7 attacks while ensuring system stability, providing clients with unparalleled peace of mind against any cyberthreat.

Against ransomware attacks, VNIS acts as an impenetrable shield, significantly minimizing the negative impact on a company's information systems. VNIS can detect and automatically block all critical security vulnerabilities listed by OWASP (Top 10 OWASP), including Broken Access Control, SQL Injection, Cryptographic Failures, and more, ensuring continuous website protection. Furthermore, with over 2,000 security rules and CRS (Core Rule Set) management capabilities, VNIS safeguards websites, preventing attackers from exploiting security loopholes for data encryption or unauthorized access.

VNIS safeguards businesses with:

VNIS Platform's Comprehensive Security Model

Robust Global Infrastructure

With over 2,300 PoPs (Points of Presence) spanning the globe, the VNIS solution empowers securities firms to handle massive traffic volumes of up to 2.600 Tbps. This ensures unwavering website stability and performance, guaranteeing seamless and secure transactions for investors, even amidst volatile market conditions, sudden traffic surges, and even large-scale DDoS attacks.

Leveraging AI and Machine Learning in system management

The VNIS platform is equipped by VNETWORK with Multi WAF, featuring multiple Cloud WAF clusters worldwide, ready to harness the extensive cloud infrastructure to swiftly isolate threats during traffic spikes. This is complemented by a WAF network monitoring system (Scrubbing Center) that orchestrates the operations of Cloud WAF clusters across multiple countries, enhancing Layer 7 DDoS mitigation.

Harnessing the power of artificial intelligence

VNETWORK has developed an Intelligent Load Balancing System (AI Load Balancing) integrated with a Real User Monitoring (RUM) system, offering granular analysis of attack sources and real user interaction reports to optimize website traffic routing. Additionally, the AI Load Balancing system enables load balancing across multiple servers with options including IP hash, round-robin switching, and failover.

24/7 SOC expert support

Recognizing the criticality of timeliness in security, VNETWORK has established Security Operation Centers (SOCs) with a spirit of readiness to combat emergencies and minimize losses. VNETWORK's SOC teams are currently present in Vietnam, Hong Kong, Taiwan, Singapore, and the UK, providing support and collaborating with businesses against any attacks.

According to Cybersecurity Ventures, email remains the most prevalent vector for ransomware attacks in 2023. Statistics reveal that 92% of ransomware attacks originate from phishing emails, and 64% of ransomware victims fall victim by clicking links or opening attachments in emails. Ransomware attacks are projected to surge by over 30% in 2024, with attackers employing artificial intelligence (AI) to craft sophisticated phishing emails that deceive recipients.

In response to the growing complexity and scale of email-borne threats, particularly ransomware, VNETWORK introduces EG-Platform, a comprehensive email security solution. EG-Platform acts as an email firewall, safeguarding email systems in both inbound and outbound directions through three layers of protection:

• SpamGUARD: Effectively blocks spam emails (Anti-Spam Inbound).
• ReceiveGUARD: Thwarts phishing emails, ransomware, targeted attacks (APT, BEC), viruses, and malware.
• SendGUARD: Manages and controls emails before they are sent.

EG-Platform's comprehensive Email security mechanisms

Leveraging advanced and intelligent email security technologies, EG-Platform tackles all types of targeted email attacks, detects and blocks viruses, and counters emerging email threats with outstanding features, including:

• Machine Learning technology: Automatically analyzes and learns from attack data, enabling rapid and effective detection and prevention of new email security threats.
• Artificial Intelligence (AI) technology: Enhances the ability to identify and block sophisticated, complex attacks.
• Virtual area: Scrutinizes and analyzes inbound emails to identify malicious behavior from new, undetected viruses, effectively filtering and blocking malicious emails.
• Content-to-Image conversion: Converts email content into images upon detecting malicious links, minimizing user clicks on virus-laden links.
• Email transmission path inspection and analysis: Alerts and promptly addresses suspicious signs and anomalies in the transmission path of received emails, minimizing damage and ensuring secure user actions.
• Comprehensive and detailed system reports: Provides complete and continuous information on the status and attack landscape of emails, enabling users to timely adjust their email usage behavior.
• Flexible customization based on needs: Empowers users to enhance security capabilities while maintaining convenient email usage.

In the face of increasingly sophisticated cyberattacks, selecting the right security solution is paramount for businesses, directly impacting system safety and stability, user experience, and business operations.

VNETWORK's VNIS and EG-Platform security solutions provide comprehensive protection against cyberattacks. For detailed information and pricing, please contact us at Hotline: +84 (028) 7306 8789 or email: contact@vnetwork.vn.