KUALA LUMPUR (Jan 19): Geopolitical conflicts have spilled over into cyberspace, generating cyber-attacks.

In a statement on Tuesday, International Monetary Fund (IMF) Financial Counsellor and Director of the Monetary and Capital Markets Department Tobias Adrian said disputes can arise for many reasons, and when differences are not settled through diplomacy, they could needlessly deteriorate into wars — including in cyberspace.

“In the modern age, as warfare goes online, we are more likely to witness cyber-attacks and the use of state-of-the-art technology.

“Compounding the problem, cyber-attacks often spill over and generate a much broader impact than originally intended."

Adrian said cyber operations could involve commercial, government, or military targets.

Recent incidents demonstrate the ability of computer hackers to cripple a country’s critical infrastructure.

“Electricity, water, telecommunications, and transportation are among these essential infrastructures — those that help a society and economy function.

“Third-party service providers that are part of the complex supply chains could also be disrupted."

Adrian said the financial sector continues to be a target of choice for criminal gangs and other types of attackers.

For the financial sector, critical infrastructure includes systems for clearing, settling, or recording payments, securities, derivatives, or other financial transactions.

“Given their systemic importance in most jurisdictions, their operations and cyber resilience are subject to a high degree of oversight to ensure their safety and efficiency.

“Preparedness is key across the different types of cyber-attacks — phishing, supply chain attacks, or ransomware, for example — that could unfold because of geopolitical conflicts."

Adrian said greater digitalisation brings greater vulnerabilities.

As more systems and devices are connected and depend on computer software to function, this widens the attack surface.

“The interconnectedness poses challenges for financial stability.

“As the financial sector adopts newer technologies and requires greater involvement of third and fourth parties, emerging concentrations of technology, vendors, and service providers assume systemic proportions."