Financial & Banking Sector: Critical Infrastructure of the US Economy - Research Paper

Introduction

The critical infrastructure sectors are those whose assets, systems, and networks are essential to the United States. If these sectors are destroyed or incapacitated, they would have a significant impact on security, the economy of the nation, people's health, and safety, or all the systems combined (Moteff & Parfomak, 2004). The essay will discuss the financial and banking critical infrastructure sector. The financial sector is the major components of the world economy. The sector is complex and primarily possessed and run by private bodies. The Banking and Finance Sector is made up of more than 29,000 financial firms, which include banks, thrifts, insurers, investment companies, and other commercial utilities. The firms in the finance and banking sector offer different services to their customers. Key among them is allowing customers to deposit funds and make payments to other parties, giving credit and liquidity to their clients, and giving their clients a platform for long and short term investment.

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Finance and Banking

The financial sector is crucial in economic performance. The industry has an indirect influence on financial markets as it raises the living standards of people. Finance and banking critical infrastructure encourages saving and provides credit to people in society. By doing this, it enables its clients to deal with economic uncertainties by providing a platform for pooling and sharing financial risks. Thus, it reduces the risk of manufacturing and trading goods. Also, financial intermediaries such as banks and insurance companies encourage real investment and increase the per capita income; therefore, improving the quality of life of the American citizens.

The banking and finance critical infrastructure carries risk assessment regularly and has determined that its challenges are in its dependence on telecommunications and the power grid. However, these are only dependence risks of the sector. The sector has many more vulnerabilities, which include economic crimes and cybercrime. The financial sector is vulnerable to resource misuse, bribery, corruption, and cybercrime (Cummings, Lewellen, McIntire, Moore &Trzeciak, 2012). The resources in this sector can be misused when the management engages in fraud for personal gain. The issue of money laundering also has a significant impact on the financial industry (Parfomak, 2007).

The financial sector is also a major victim of cyber-attacks. It is because banks and other financial institutions have greater financial gains to the hacker compared to other areas of critical infrastructure (Cummings, Lewellen, McIntire, Moore &Trzeciak, 2012). Besides, the digital banking systems have exposed the banks to cyber insecurity more so when they lack the proper defenses.

Different strategies have been put in place to deal with the vulnerabilities of the finance and banking sector. The issue of money laundering can be dealt with by the institutions ensuring that they put in place anti-money laundering procedures by having consistent data about their customers (Parfomak, 2007). Also, they should ensure that they are in line with the regulator's anti-laundry regulation. Further, the financial sector can deal with bribery and corruption by regularly carrying out risk assessments for crime in the institutions. The tools used for the evaluation should be effective to uncover every fraud and prevent any corrupt practices. Also, the financial institutions can implement programs that highlight third parties with whom not to associate with themselves. These are the corruption exposed individuals, and negative references from the media. Besides, the financial sector would encourage its clients to speak up in case bribes are solicited from them. The issue of cybercrime can be dealt with by educating its employees about it, identification of the culprits and their motivation, and adopting measures that the peers and regulator advocates to counter-cybercrimes.

The banking and finance sector is interdependent with the other components of critical infrastructure. It depends on the information and communication sector as well as the electric power sector. Although the interdependence is beneficial, it also exposes the financial sector to vulnerability such as terrorism, fraud, and natural calamities (O'Rourke, 2007). The financial sector depends on the telecommunication sector for communication and advertisement of its services (O'Rourke, 2007). The telecommunication sector allows messages to be passed all around the globe. Also, it provides the finance and banking sector with information about the potential market. Further, the financial sector depends on the energy sector. The sector provides the financial institutions with the energy and electric power to provide its services to the customers and also for transport.

The following strategies can be used to improve and enhance the protection and reduce the vulnerability of the finance and banking critical infrastructure. The first strategy would be to ensure that the customer data in the system is consistent and reliable. It should indicate the source of income which should be in harmony with the saving power and investment of these clients. Also, the financial sector should ensure that it uses programs that are secure from cybercriminals. Also, the financial institutions should ensure that they have updated their systems regularly to safeguard sensitive data.

Conclusion

In conclusion, the finance and banking sector is a critical infrastructure in the economy of the United States. It plays a role indirectly in improving the lives of people by providing the platform for credit and investment. The sector is vulnerable to economic crimes of fraud and cyber-attacks. These crimes can be prevented by education, use of regulatory guidelines, and use of a system that do not predispose it to hackers. The sector has interdependence with the telecommunication and energy sector.

Reference

Cummings, A., Lewellen, T., McIntire, D., Moore, A. P., & Trzeciak, R. (2012). Insider threat study: Illicit cyber activity involving fraud in the US financial services sector (No. CMU/SEI-2012-SR-004). CARNEGIE-MELLON UNIV PITTSBURGH PA SOFTWARE ENGINEERING INST. Retrieved from: https://apps.dtic.mil/docs/citations/ADA610430

Moteff, J., & Parfomak, P. (2004, October). Critical infrastructure and key assets: definition and identification. LIBRARY OF CONGRESS WASHINGTON DC CONGRESSIONAL RESEARCH SERVICE. Retrieved from: https://apps.dtic.mil/docs/citations/ADA454016

O'Rourke, T. D. (2007). Critical infrastructure, interdependencies, and resilience. BRIDGE-Washington-National Academy of Engineering-, 37(1), 22.Retrieved from: https://pdfs.semanticscholar.org/6c17/b35ec7555a9f27d5ccb6ca1d357a20b5ce0a.pdf

Parfomak, P. W. (2007, January). Vulnerability of concentrated critical infrastructure: Background and policy options. Library of congress Washington DC Congressional research Service. Retrieved from: https://apps.dtic.mil/docs/citations/ADA466835