Cyber criminals and hackers often probe for and target the weakest links in the system to gain access to the critical IT assets. Within an FI, the weak links could also manifest in the carelessness or lack of cyber-security awareness by individuals or lax processes, on top of vulnerabilities in adopted technology systems. 1  http://www.csoonline.com/article/3054570/security/symantec-zero-days-doubled-in-2015-more-companieshiding-breach-data.html. 2  http://www.pwc.com/gx/en/issues/cyber-security/information-security-survey.html. BIS central bankers’ speeches  3  18. Banks therefore need to take a holistic approach to address cyber risk. A system of cyber-intelligence exchange to identify potential vulnerabilities and frequent testing of the robustness of cyber defences are key to this effort. 19. MAS has been working closely with the ABS in both of these areas. The ABS Standing Committee on Cyber Security (ABS SCCS) was created to raise overall cyber awareness, to share cyber intelligence and build resilience among financial institutions. 20. Some of the recent initiatives which MAS has collaborated closely with the ABS SCCS include: •  ABS Penetration Testing Guidelines. These set out the industry best practices for the conduct of penetration testing. The results of members’ penetration tests have been shared with the ABS SCCS members to engender collective learning. •  Cyber intelligence and information sharing through various channels, such as the global Financial Services Information Sharing and Analysis Centre. Given the interconnectedness of the financial eco-system, such information sharing is critical. Enhancing risk management in outsourcing arrangements 21. The third topic is Risk Management of Outsourcing Arrangements.

In addition, the local banks’ all-currency liquidity coverage ratio (LCR) are already above 100%, well ahead of Basel’s implementation timeline of 1 January 2019. 11. However, we should not be complacent. Banks should continue to improve risk management processes, and watch out for risks arising from new and emerging trends such as persistently low interest rates, increasing interconnectedness between financial institutions and markets, and the growing use of sophisticated technology. 2  BIS central bankers’ speeches  12. Stress tests will become an increasingly important and integral part of risk management in the financial sector. •  For individual participating banks, the results facilitate discussions with MAS on their resilience to plausible adverse scenarios, planned responses, and actions to mitigate risk management gaps identified from the exercise. •  For the banking sector, the stress test results help to identify common vulnerabilities across FIs, such as exposures to a particular sector or country. This helps banks enhance their risk mitigating responses. 13. To make the exercise more useful, MAS encourages banks to compare the IWST results against their internal stress tests and sensitivity analyses and to assess whether the differences in scenarios and corresponding results reflect particular risk exposures faced by the bank. 14. In addition to prescribed scenarios, MAS has also been working with participating banks to conduct reverse stress tests. This involves banks describing scenarios under which their solvency could come under threat, thereby providing further insights on the risks that could impair the financial system.