FRB Vice Chair Barr Warns Cyber Threats Will Become Increasingly Disruptive

Federal Reserve Board ("FRB") Vice Chair for Supervision Michael S. Barr argued that good cyber defense is "not sufficient" to address cyberattacks; he emphasized that banks must focus on operational resilience and improved risk management to confront the threat.

At a Conference on Measuring Cyber Risk in the Financial Services Sector, Mr. Barr acknowledged the importance of uncovering and remedying vulnerabilities in bank systems, but recommended additional risk-mitigating measures, including (i) a focus on resilience strategies; (ii) improving risk management over third-party service providers; (iii) improving data and analysis to quantify cyber risk; (iv) better analysis of the interconnectedness between financial institutions and service providers to assess the impact of an incident on the broader financial system; and (v) increasing international coordination among market participants and regulators.