Cybersecurity has eclipsed turbulent financial markets as the number one concern for the world’s largest sovereign wealth fund, which faces an average of three “major” cyberattacks per day.
The number of significant hacking attempts against Norway’s $1.2 trillion oil fund Norges Bank Investment Management has doubled in the past two to three years, according to CEO Nicolai Tangen.
The fund, which last week reported its biggest dollar loss in six months after inflation and recession fears rocked markets, suffers about 100,000 cyberattacks annually, of which its top executives say more than 1,000 are serious.
“I worry more about cyber than markets,” Tangen told the Financial Times. “We’re seeing a lot more attempts, more attacks [that are] increasingly sophisticated.”
In fact, the fund’s top executives are concerned that concerted cyberattacks will become a systemic financial risk as markets become increasingly digitized.
Trond Grande, his executive vice chairman, pointed to the 2020 attack on SolarWinds, a software vendor, by Russian state-backed hackers, which allowed them to target several US government agencies, including the Treasury Department and the Pentagon, as well as a number of Fortune 500 companies, including Microsoft, Intel and Deloitte.
“They estimate there were 1,000 Russians [involved] work in a coordinated manner in this one attack. I mean, jeez, that’s our whole building in an attack, so you’re up against some tremendous forces there,” he said.
Cyber attacks on the financial industry have increased significantly in recent months. Malware attacks rose 11 percent globally in the first half of 2022, doubling at banks and financial institutions, according to cybersecurity specialist SonicWall. Ransomware attacks fell 23 percent globally but increased 243 percent against financial targets over the same period.
Perpetrators can range from private criminal groups to government-sponsored hackers. According to SonicWall Chief Executive Brian Connor, Russia, China, Iran and North Korea are the top state sponsors of cyberattacks. “As sanctions go up, so does the need for money,” he said.
A cybersecurity expert who advises another sovereign wealth fund said the “threat landscape” for such groups is “massive”.
“When it comes to ransomware, about half of network attacks are phishing attempts and the other half are remote access attacks using stolen credentials. They also have insider threats [involving] someone with a USB drive, and sometimes people with access just get bribed,” he added.
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In the financial sector, the vulnerabilities of banks, stock exchanges and essential financial infrastructures such as clearing houses have been the focus of interest for national security authorities such as B. the bi-annual US cyber war games exercise Quantum Dawn.
However, investment firm executives have also become increasingly concerned about cybersecurity in recent years, with some warning that the dangers are underestimated and the rising costs of protecting against attacks.
In the Nordic region, rising tensions with Russia following its invasion of Ukraine have increased digital risks. “Given the financial situation Russia is in and the increase in sanctions, the Nordic countries are part of this bloc,” which penalizes Moscow, Connor said.
JPMorgan analysts in a recent report highlighted a spate of cyberattacks in the wake of Russia’s invasion of Ukraine and warned that “critical industries in the US, particularly the energy and financial sectors, are on high alert over the possibility of retaliatory attacks as Western sanctions are weighing on the Russian economy”.
The report emphasized that the dangers are widespread and long-term in nature and will only increase in the coming years.
NBIM was founded in the mid 1990s to invest the revenues from the Norwegian oil and gas industry. It has grown to account for about 1.5 percent of all publicly traded companies worldwide. The quasi-index fund is hosted by the Norwegian Central Bank and has its overall investment mandate set by the Ministry of Finance.
Additional reporting by George Steer in London
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