do not happen by side stepping the importance of robust risk management practices. i also would like to highlight here that the nbfcs operate in a dynamic and challenging environment, facing a multitude of risks that can impact their stability and operational resilience. let me highlight just three of these which i believe deserve heightened attention. cybersecurity and operational risks 1 / 5 bis - central bankers'speeches in today's digital age, cybersecurity threats represent a significant operational risk. the stark reality is that a cybercriminal needs to succeed only once, while organisations must always remain vigilant and resilient. one of the primary cybersecurity risks faced by nbfcs is the threat of data breaches and unauthorized access to sensitive information. there are also other forms of cyberattacks, including malware infections, phishing scams, and ransomware attacks. these attacks can disrupt operations, compromise systems and data integrity, and lead to financial extortion or loss of critical information. to mitigate cybersecurity risks, nbfcs must adopt a proactive and comprehensive approach to cybersecurity. this includes implementing robust cybersecurity policies and procedures, conducting regular risk assessments and vulnerability scans. deploying advanced security technology tools such as firewalls, encryption, and intrusion detection systems are non - negotiable. further, providing cybersecurity training and awareness programs for employees, on an ongoing basis, should become a way of life. risk management and internal audit functions have to urgently build on their skill sets so that they are able to assess periodically, the it and cyber security stance and preparedness of their entities. credit risks from rule - based credit models many nbfcs are increasingly turning to rule - based credit engines to accelerate the growth of their lending portfolios. while automation can enhance efficiency and scalability, nbfcs should not allow themselves to be blinded by these models. it is crucial to recognize that rule - based credit engines are only as effective as the data and criteria upon which they are built. overreliance on historical data or algorithms may lead to oversights or inaccuracies in credit assessment, particularly in dynamic or evolving market conditions. therefore, nbfcs must maintain a clear - eyed perspective on their capabilities and limitations, supplemented by continuous monitoring and validation of credit scoring models. it is incumbent upon the supervised entities to keep the rule engines and models calibrated from time to time

luis de guindos : financial stability and the pandemic crisis speech by mr luis de guindos, vice - president of the european central bank, at the frankfurt finance summit, frankfurt am main, 22 june 2020. * * * as the last speaker of the day, after providing you with a brief overview of the economic outlook for the euro area, i will focus my remarks on the financial sector, the stability of the financial system as a necessary condition for the recovery from the pandemic crisis and related policy issues. the euro area is experiencing an unprecedented contraction. following a sharp drop in real gdp of 3. 6 % in the first quarter of the year, a much larger contraction is expected in the second quarter, with eurosystem staff projections seeing a fall of 13 %. after this unprecedented downturn, a rebound in activity is expected in the second half of the year, supported by very accommodative monetary and fiscal policies, along with an expected gradual resumption in global activity. however, the speed and scale of this recovery are extremely uncertain. eurosystem staff macroeconomic projections for the euro area foresee real gdp falling by 8. 7 % in 2020 and rebounding to growth rates of 5. 2 % in 2021 and 3. 3 % in 2022, which means that gdp at the end of 2022 will still be 4 % lower than projected in our march 2020 staff projections. turning to inflation, euro area headline inflation is declining sharply and is expected to remain subdued this year. euro area annual hicp inflation decreased to 0. 1 % in may, down from 0. 3 % in april, mainly on account of lower energy price inflation. over the medium term, weaker demand is expected to put downward pressure on inflation, which will be only partially offset by upward pressures related to supply constraints. annual hicp inflation is projected to be 0. 3 % in 2020, 0. 8 % in 2021 and 1. 3 % in 2022 in the june 2020 eurosystem staff projections. the monetary policy measures taken by the ecb in march were critical in removing the tail risk of the pandemic, with the drop in economic activity and rising financial market turmoil morphing into a financial crisis. that risk has receded materially since march. however, in our reassessment of the situation in june, two main factors called for additional monetary policy easing : the deteriorating inflation outlook threatening our medium - term price stability objective and