Requirements for the level of information protection began to grow with the increase of attacks not only on large companies, but also on ordinary users. Here is more about Data Room security measures.

Analysis of information security threats

In the conditions of rapid informatization of society, wide application of computer equipment and computer systems, issues of information security become especially relevant. Increasing the volume of processing and transmission of information in computer systems and networks, especially in banking systems, in the management systems of large financial and industrial organizations, energy companies, transport, in management and communication systems for military purposes requires new approaches to protocols and security mechanisms in the data transmission process. The requirements for security and reliability of processed and transmitted information in such systems are very strict, as a failure of the system or exceeding the established restrictions of these properties can lead to significant financial and material losses. 

Stay safe with Virtual Data Room

Today Data Rooms are widely used for ensuring a secure workspace for most business processes. Cloud-based Data Room provides data storage, access to computing resources, interconnection, and data security by the model as a service. Clouds optimize the overall cost and performance of the infrastructure and allow you to flexibly manage other people’s resources at any time for any of your needs.

Most companies prefer using Data Room solutions because of:

• Cost. Cloud computing allows organizations to pay for all the necessary resources and avoid costly investments in local IT systems that are rarely used.
• Energy efficiency. Cloud computing centers benefit from energy consumption due to the large-scale and efficient use of energy. 
• Accessibility. Data Rooms make it easier to access files or software from any device that has an Internet connection.
• Reliability. Cloud systems have high standards of data protection and encryption. Reliable providers invest huge sums in the development of security, encryption, and fault tolerance systems. 

Data Room end-to-end encryption protocols

According to https://datarooms-review.com/, channel, and end-to-end encryption is used to counter security breaches in the Data Room:

• With channel encryption, the entire data stream in the channel is protected. One of the disadvantages is the need to decrypt the data packet each time it passes through the packet switch, and the message becomes vulnerable in each switch.
• With end-to-end encryption, the encryption process is performed only in the two end systems. A significant disadvantage is the lack of encryption of the entire data stream, as packet headers are transmitted in the open (X.25 protocol).

End-to-end encryption is a method of data transmission in which only users who participate in communication have access to messages. Thus, the use of end-to-end encryption does not allow access to cryptographic keys by third parties. 

To hide the message, the application on your device generates two cryptographic keys – public and private. The public key can be passed to anyone who wants to encrypt the message for you. Closed – decrypts messages sent to you and never leaves your device.

With end-to-end encryption, the encryption function can be placed at the network level. The placement of encryption means end-to-end data protocols, such as X.25 or TCP network layer protocols, provide end-to-end data transmission security within any single network. However, such encryption may not provide the necessary security for data exchange between networks, for example, when using e-mail, electronic data interchange, or when transferring files.

E2EE is ideal for those who care about privacy and security. It is impossible to talk about complete security when using end-to-end encryption, but its level is quite high.

Value-at-risk (VaR) is a fundamental concept of financial risk management. It basically means that an asset’s value is no longer guaranteed in terms of its current market price, as and when the original cost to buy the security would have been. The ideal way to look at the var is to view it as an insurance policy, where the risk of loss is added up over the amount of premiums paid, at each point in time.

The main concept of value-at-risk calculations is not only based on calculating future cash flows, but also calculating the amount of loss one is willing to accept in terms of future earnings. One calculates how much they are willing to lose, above and beyond the initial investment, to ensure that they ‘buy down’ their portfolio in case of a disaster. Most importantly, one must calculate how much they are willing to allow their portfolio to deteriorate. There are many different models and ways to do this, but most investors simply use one that involves calculating portfolio aging. However, there are other considerations to be made for your portfolio in the event of a disaster, such as the effects of inflation, deflation, or even a sudden crash in business profits, for example.

Value-at-risk can also be used to make better market risk management decisions. This is because it takes into account the fact that past market values are no guarantee of future results. Therefore, a company may have a good history of making great returns in the past, but a dramatic decline in the value of the company stocks in the recent past could lead to disastrous losses. Similarly, if market prices fall by a large percentage, this can cause significant and painful losses. This is where market risk management comes into play.

In some cases, a company’s financial instruments may not represent a good value-at-risk calculation model. One such example is a CDO, which represent one stock, but has many different securities held within it. Therefore, when you calculate value-at-risk using historical data, you will not necessarily be correct. A more efficient method of calculating this is to apply the delta-weights method, which examines the historical performance of individual securities within a portfolio. By comparing this with current stock prices, you can determine how likely a security will fall in price over the long run, allowing you to make better risk/reward trades.

It is important to remember that a good approach to value-at-risk calculation is to combine historical data and current information with some degree of current knowledge to evaluate historical performance. If you find that most of the factors that affect risk are present, then this will mean that a market is likely to have low levels of volatility, which will reduce both the likelihood of a large-scale crisis, as well as the overall impact on value-at-risk. However, if a large-scale crisis does occur, it may indicate that the market is already highly volatile and will prove difficult to maintain profitability.

Value at risk measures require a certain amount of knowledge about the assets being analyzed. For example, when evaluating portfolio optimization, it is important to know what the asset characteristics are, as well as what kinds of risks are associated with them. By developing a well-rounded portfolio optimization strategy, you can increase the accuracy of your risk measures.

In addition to standard deviation and standard error, several other useful metrics exist for use in value-at-risk analysis and implementation. These include maximum drawdown, one-year forward default time, and one-year trailing stop. A one-year forward default time represents the period in which an investor will remain invested at a level above their costs of capital; one-year forward default is the time at which one would ideally want to sell off all of one’s investments, should negative returns become apparent; and one-year trailing stop is the length of time during which a particular portfolio is risk free.

Value at risk is an extremely important concept in asset risk management. Its usefulness in calculating portfolio optimization can be seen in its application in almost every type of risk measure, with the sole exception of natural disasters. The concept is truly universal and is an unavoidable part of many modern portfolios. Its simplicity and practicality make it one of the most fundamental building blocks of good risk management practices. It is vital that investors properly understand and utilize the value at risk concept in their investment decision-making.

The two concepts that make up value-at-risk and market risk management are extremely useful when it comes to managing investments. Value at risk is calculated by subtracting the asset’s current market price from the total value of the holdings. Because the calculation uses the total market price of the item, not just the current market price, it has the advantage of giving a more accurate picture of what a particular investment would likely be worth given a variety of different circumstances. Market risk, on the other hand, involves all the factors that go into the calculation of the price of an asset. It is basically the impact that changes in market prices will have on that asset’s value. Both concepts can help managers and investors keep track of how valuing their portfolios is doing.

Value-at-risk calculations are important to anyone who manages a portfolio that contains CDs. Without them, investors would not be able to calculate the potential recovery of the principal balance they have invested in each quarter. In order to determine the amount of premium they should charge, many investment banks and financial institutions use value-at-risk calculations to gauge the performance of their investment portfolios.

Some investors may view this type of risk as an unnecessary intrusion into their carefully constructed financial portfolio. After all, how does a bank decide how much to pay a defaulting customer if it doesn’t even know what the default might be? However, market risk management is not just about evaluating risk-a key part of market risk management involves evaluating portfolio vulnerability to unexpected events. Default rates can’t always be predicted; in fact, none can yet every investor must account for the possibility of significant losses. To do this, many investors make use of market risk management techniques such as credit default swaps and interest rate risk management.

One example of using risk management to reduce the inherent risk in an investment portfolio is to replace the portfolio’s component investments with one instrument only: cash. By doing so, the portfolio’s overall risk is reduced by one third. Cash instruments are less risky than stocks, options, bonds, and other common investments and they provide a flexible way to move funds between various assets and markets. The use of cash instruments for allocating risks reduces the need for valuing the individual components of the portfolio, and since the instruments are often of greater size and have higher market liquidity, they allow more accurate evaluation of portfolio risk.

There are two types of risk measure that are used by today’s Value At Risk (VaR) applications. One of these is the one-year VaR, which evaluates the loss value of a portfolio over one year, or a one-year period. The second type of measure is the five-year or ten-year VaR, which evaluates the loss value over a minimum of five years. These two types of measurements are the basis for standardizing the VaR approach.

In general, the calculation of value-at-risk (VaR) involves the study of risk by identifying and describing the potential losses that occur in response to changes in the underlying portfolio, financial market, or business. Although the expression “risk” is often associated with the word “risk” and can therefore be used as a definition of the concept of risk management, the actual definition of risk management is much more complex and includes many different concepts and assumptions. Many investors are familiar with the term “risks” and how this relates to their traditional risk management framework, but they may not understand how this risk measurement and its various assumptions actually interact and interrelate within the VAR framework.

Value At Risk (VaR) is based on a set of economic or practical assumptions regarding future market performance, which can often vary significantly from the underlying investment portfolio. This is why the value-at-risk calculation is not necessarily the same across all financial risk measures. For instance, while some managers may view short-term liabilities as a lower risk than long-term liabilities, others may view medium- and long-term assets as a higher risk than inventory, and yet others may view bond issuance as a higher risk than buying stocks. Because of this wide-ranging interpretation of risk and the different assumptions upon which it is measured, the calculation of value-at-risk is very difficult to standardize, which makes it especially challenging to use as a basis for comparison between various types of financial risk measures.

To facilitate discussion, we will describe some common assumption types and an illustration of how each of them may be used in a standard financial risk measure. The most common type of risk assessment is the historical simulation. Historical simulation is a best-of-all-world approach that takes into account not only the present but also possible future scenarios of return and price of selected investments. It takes into account not only the present value of the portfolio, but also its probable return. Historical simulation is most useful for computing a portfolio equity multiple times with all of its variables updated, such as price, risk, and reinvestment. Standard deviation is another common assumption type and is used in the historical simulation.

The financial sector is investing heavily in cybersecurity after a large number of hacks. Implementing effective cybersecurity measures is especially difficult today as there are more devices than people and hackers are using increasingly sophisticated attack methods.

We increasingly rely on digital financial services, and over the past ten years, cyberattacks have tripled, and the financial services industry remains the most vulnerable. In this situation a powerful antivirus software should be a priority. Unlike the TotalAV antivirus which is good for home use only, bank systems require higher security standards. Cybersecurity issues have definitely become a threat to financial stability.

What is it?

Cybersecurity is an activity aimed at protecting systems from digital hacks. The purpose of such attacks is to obtain confidential information, then change or completely destroy it, extort money from users and disrupt business processes.

The importance of such security

Hacking tools are now cheaper, simpler, and more powerful, with their less experienced hackers doing more damage at a much lower cost than before. The proliferation of services provided using mobile devices which is only a technological platform available to many people, devices are more opportunities for hackers. Attackers attack organizations large and small, rich and poor countries, outside national borders. In connection with this fight against cybercrime and reduce the risk of becoming a common international level within countries.

Types of the most widespread threats

– Fishing

The purpose of this type of scam is to steal sensitive data such as credit card numbers and credentials. This is the most common type of cyberattack. You can protect yourself from phishing with user education or a solution that blocks malicious emails.

– Ransomware

One of the types of malware. They extort money by blocking access to files or computer systems until a ransom is paid. However, paying the ransom does not guarantee the restoration of access to files or systems.

– Malware

It is software designed to access your computer or cause damage.

– Social engineering

Attackers use social engineering to trick you into revealing confidential information. They may ask you to make a money transfer or provide access to sensitive data. Social engineering can be combined with any of the types of threats listed above to make you follow links, download malware, or trust a malicious source.

Cybersecurity of the bank financial systems

Protecting highly sensitive data is a top priority for the bank’s financial systems. But sacrificing network performance for security is unacceptable because consumers and businesses need access to every offer in real-time.

Top Cybersecurity Issues in Financial Services

1. Cost reduction

2. Monitoring and tracking

3. Operation efficiency

4. Flexibility

5. Compliance reporting

The ability to retaliate

As cyberattacks occur with increasing frequency, the financial system must be able to quickly resume functioning even with a successful attack, ensuring stability is maintained. So-called response and recovery strategies are just emerging, especially in low-income countries that need support in developing them. International mechanisms are needed to support response and recovery in cross-border organizations and services.

Capacity building

Helping developing and emerging market economies build on cybersecurity will strengthen and support financial inclusion. Low-income countries are particularly vulnerable to cyber risk. The COVID-19 crisis is taking a pivotal role in the healthcare system. Safe and reliable use of technologies for safe use for development, in connection with which protection from cyber risk is necessary. As with the virus, as cyber threats spread to any one country, the rest of the world becomes less secure. 

Mistakes of the bank’s financial systems

Building local security systems, firstly, is extremely expensive, and secondly, practically ineffective. Banks, having a significant amount of capital, at the same time do not have significant free funds to maintain the level of cybersecurity at the proper level and prefer to distribute them to other expenses.

Even the most sophisticated cybersecurity infrastructure turns out to be completely ineffective if the bank employees fail to comply with the fundamental rules of cybersecurity. Hackers often rely on the human factor, relying on the fact that an employee will follow a “harmful” link or work remotely from an infected device. Practice shows that elimination of this problem is perhaps the most difficult task of the company’s management and security department.

The best defense is training

If employees do not know how to recognize a security threat, how can they be expected to avoid, report or eliminate it?

90-95% of hacks are caused by human’s mistakes. In addition, only 38% of international organizations say they are ready to deal with sophisticated cyberattacks.

Today, the favorite tactic of cybercriminals is social engineering it is the psychological manipulation of victims in order to convince them to voluntarily or unknowingly surrender private data. Another, already announced earlier, is fishing – 95% of attacks are the result of it scams, so learning the basics is essential.

Types of cybersecurity

– Encryption

A program or service that uses encryption will accept your messages or files and turn them into code that prevents the original information from being read. This means that even if an attacker interferes with your connection, they will not see anything.

– VPN

VPN services hide your IP address, which is the address that serves as your unique identifier on the network and is somewhat similar to your home address. If you hide it, scammers won’t be able to find your location or your network.

– SIEM

It is a real-time protection tool. SIEM solutions are available as software or services. By monitoring the activities of the company, they instantly warn of any violations and prevent problems.

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