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CrowdStrike outage is another sharp warning for banks
Relying on a handful of third-party vendors creates risks for the financial industry.
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Successful cyber attacks or major problems at one or more of the leading cloud-computing providers could leave lenders with weak risk management struggling to maintain basic functions.
PHOTO: BLOOMBERG
Paul J Davies
The chaos that froze digital systems around the world on July 19 is exactly the kind of crisis that financial regulators have been fretting about in recent years. What’s worse, US bank supervisors have recently criticised leading lenders for poor management of such operational risks in private report cards. Together, they are a wake-up call about the dangers of a few dominant third-parties providing critical services to the industry.
One tiny corrupt file in a security software update from CrowdStrike Holdings caused hours of outages for banks, money managers and stock exchanges, including problems at Bank of America Corp and JPMorgan Chase & Co, among others. The snafu was no one-off: Only the day before, the UK’s network for high-value payments ground to a halt amid a separate processing issue, holding up home purchases and other transactions.
