Tuomas Välimäki: Opening remarks - Nordic Cyber in Finance
Conference
Opening remarks by Mr Tuomas Välimäki, Board Member of the Bank of Finland, at the
Nordic Cyber in Finance Conference, Helsinki, 30 October 2024.
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Dear colleagues, dear friends,
A very warm welcome to the seventh Nordic Cyber in Finance conference, hosted by
Suomen Pankki, the Bank of Finland. In Finland, we hold resilience and preparedness
in high regard, and I am no exception to this. It is a privilege and an honor to open this
highly topical event today.
Over the course of the day, we will explore different themes centered on resilience and
preparedness. We will deal with hybrid threats in cyber space - critical infrastructure
protection, information manipulation and cyber defense tools. These topics will be
covered by a distinguished line-up of speakers ranging from cyber security industry to
financial institutions as well as authorities. I will now provide you with an overview of
what lies ahead and, more importantly, emphasize why these topics matter.
Network Effects, Interconnectedness, and Collaboration
The financial industry prospers on increasing network effects. This creates an inherent
drive for growth, where often the largest players dominate the market. As businesses
scale, the dependency within the industry deepens, making individual entities critical to
the overall network. While this growth may benefit business, it also magnifies the
importance of preparedness, as failures can become too large to bear.
This is true not only for payment systems and commercial banks but also for central
banks. For instance, over the last two decades, TARGET services have evolved into
one of the most efficient settlement systems globally, a testament to the power of scale.
Today we will learn how Eurosystem secures Europe's financial backbone, i.e. the
TARGET services. Ensuring the security of such a critical infrastructure is a mission
that demands relentless efforts. We must maintain and strengthen community wide
partnerships to safeguard this backbone.
Critical Infrastructure and Path Dependency
The interdependencies within critical infrastructure extend beyond finance. Consider the
electrical grid, which the financial sector heavily relies on. If a major electricity producer
or distributor fails, the consequences can be swift and severe for the whole electric
system - much like the systemic impact that we've witnessed also in financial crises.
These interconnected systems highlight that path dependencies are not
industryspecific; they are intertwined across multiple sectors, systems, agreements and
customers.
While banks are generally well-prepared for major disruptions, the same cannot always
be said for the average citizen or business. For example, large banking institutions are
likely to sustain operations during a power outage, but the same cannot be expected for
the average citizen or a small firm. The combination of systemic risk and contagion is a
central concern for central banks. It underscores the need for a holistic approach to
resilience - one that draws lessons also from other sectors. Today, we will hear from a
power system network operator on how they as a critical service providers approach
disruptions like geopolitics and green transition.
Hearts and Minds
Hybrid warfare isn't limited to physical infrastructure; it also targets our hearts and
minds. Some might argue - and I expect some of today's speakers will - that
safeguarding our mental processes is even more crucial than securing infrastructure.
While I won't take sides, I do believe both are essential.
The way people think and form opinions can have profound impact on societal order.
There is ample evidence throughout the history, how minds have been influenced and
opinions shaped. Without listing historical nor recent examples, I trust we can all agree
on this point. I also believe social media and new technologies have evidenced their
capabilities for spreading misinformation at hyper speed and sowing widespread
distrust.
The importance of this issue is especially true in the financial sector, where trust is
paramount. Lose trust, and customers will leave. Lose trust at the systemic level, and
civil order can quickly unravel.
Loss of confidence is central to all systemic crises. Even if not the initial cause, it
accelerates crises to new levels. Financial crises have demonstrated how liquidity
position of an institution is not only depending on the institution in question but also on
the confidence of others. Trust can deteriorate through contagion - even if the crisis
begins with another institution.
While technical problems can often be resolved, a coordinated attack on both
technology and public trust poses a far greater threat.
Now, imagine a hybrid scenario where critical infrastructure is compromised or even
damaged. For this example, the exact location of the damage is irrelevant, as we
normally have robust measures in place across sectors to compensate for lost
capabilities. We can re-route telecommunications, implement temporary solutions within
the power grid, and even deploy backup clearing systems if necessary. Next, imagine
that a second or third element in this scenario involves eroding overall trust in the
financial system. Suddenly, the issue becomes contagious, escalates rapidly, and
becomes much harder to contain - a textbook example of how systemic risks emerge.
This is a fascinating topic, and fortunately, we have an entire session dedicated to it
today.
Facilitating the Discussion
The financial industry is well-positioned to lead discussions on hybrid threats. Our
existence depends on trust, and our interconnectedness means that threats can have a
clear and wide-reaching impact. We engage in these conversations not to seek trouble
but to emphasize the importance of proactive, coordinated responses in a highly
networked world.
While time may be on the attacker's side, we must remain vigilant and learn when and
how to respond effectively. In this learning process acting together is vital. Cyber
threats don't follow a zero-sum game. If one institution's trust is compromised, the
effects ripple industry wide. Indeed, when it comes to fighting cyber-crime or hybrid
warfare, two plus two definitely equals much more than four. I am confident that today's
event is a step toward building a stronger, more resilient industry and society.
I sincerely hope you find the topics we discuss today both engaging and
thoughtprovoking. With ten presentations and two panel discussions ahead, let's make the
most of this opportunity to collaborate and learn from one another.
Thank you for your attention and once again, a warm welcome to this year's Nordic
Cyber in Finance conference!