bank of zambia cyber security in the financial services sector workshop speech by dr. denny h. kalyalya governor – bank of zambia monday, 6th may 2019 intercontinental hotel, lusaka, zambia cyber security in the financial services sector workshop, speech by dr. denny h. kalyalya, governor – bank of zambia – 6 may 2019 chief executives of financial institutions in zambia, representatives from mefmi, members of staff from bank of zambia and other financial institutions distinguished resource persons, dear participants, ladies and gentlemen. i am honoured to welcome you all to this important workshop on “ cyber security in the financial services sector ”, which is being jointly conducted by the macroeconomic and financial management institute of eastern and southern africa ( mefmi ) and the bank of zambia. this workshop aims to discuss financial sector vulnerabilities arising from cyber threats and risks and to develop the necessary skills and tools to make the sector resilient. let me take this opportunity to extend a special welcome to our facilitator dr. rukanda. i am sure the delegates will greatly benefit from your experience and vast knowledge on the subject. ladies and gentlemen, as you are all aware, information and communication technology ( ict ) have over the years permeated all aspects of our lives and in particular, have become the mainstay of the world ’ s financial sector infrastructure. while these ever emerging technologies such as digital transformation, artificial intelligence, internet of things, cloud computing, enterprise mobility and mobile banking, have brought about efficiency and increased innovations, they have also exposed the financial services sector to cybercrime. some notable incidents of 1 | page cybercrime include, the attack on the central bank of bangladesh, russian retail bank and seven banks in the united kingdom. the financial services sector is a key target by criminals because it is the custodian of large amount of funds in the economy. for this same reason, the financial services sector has to also deal with other types of risks, which among others include, fraud, extortion, money laundering, illicit financial flows, market manipulation, data theft, and currency attacks. with statistics showing an increase of cyber - attacks in the financial sector, the importance of ensuring that our institutions are cyber resilient cannot be over - emphasized. ladies and gentlemen, the financial services sector has to see cybersecurity for what it is, a large scale operational risk deserving the utmost attention and thus develop the necessary systems and cultures throughout

can hardly be over - emphasised. this is even more pronounced given the recent electricity outages experienced across the country and floods that have ravaged some parts of zambia. chairperson, it is also pleasing to note that, in the recent past, there has been recognition of the need to adopt economic and structural reforms in most african countries and some benefits are already evident in this regard. inflation rates have been falling in most countries and they have registered appreciable expansion in economic activities with gdp growth rates averaging at about 5 % in 2007. in addition, most countries have become more democratic in political circles, giving more say to the public on the running of governments and their institutions. distinguished participants, allow me now to turn to the subject we are gathered here for, that is, “ central bank governance ”. good corporate governance is generally acknowledged as important in economic management. in this regard, central bank governance is arguably defined by a number of key - concepts or pillars, which together should form the basis of an effective legal framework governing a central bank and on which central bank governance should rest, that is, operational independence, democratic accountability and transparency. despite its common usage, it is not always very clear what central bank transparency amounts to. generally, two definitions of transparency can be distinguished in the policyoriented literature. firstly, central bank transparency is referred to as the activities of the central bank in providing information. thus, in this case, transparency has been defined as the degree to which information on policy actions is available. however, a somewhat broader approach to transparency includes the public ’ s understanding of the decisions taken by the monetary authorities and the reasoning behind it. ladies and gentlemen, the mere fact that a central bank has to conduct monetary policy in a transparent manner at best results in the availability of the information necessary in order to judge the bank ’ s performance. discussions of this information are not only done by the government but also most importantly, the public at large. the latter ’ s perception of what the central bank does and how it is done may have an impact on the central bank performance. furthermore, mr. chairman, our contribution therefore should set out to develop the pillars on which central bank governance must rest. these include operational independence, accountability and indeed transparency which are complementary. yet, certain tensions between these elements of governance cannot be ignored and have to be observed when establishing a code of good governance. with respect to operational independence, there seems to be consensus among academics and central bankers that central banks must