Residents warned of the impact of market crashes and cyberattacks
JOBURG - Anthony Smith, risk advisory and financial crime associate director of Deloitte, warned consumers and businesses of the dangers of underestimating the impact that natural disasters, a major market crash or cyberattack could have on the economy.
His advice comes in the wake of the tough economic times currently facing South Africa, from the weakening rand to the recent credit downgrade by Moody’s Investors Service.
Smith explained the impact that such events could have on consumers and businesses across the country. “A crisis as far afield as Japan or Chile could have repercussions for banks and other businesses in Africa because of the inter-connectedness of the financial system,” he said.
“With emerging markets particularly vulnerable to the fallout, only those who arm themselves in advance with proper risk scenario planning, adequate coverage and improved infrastructure will be able to ride the storm if any of these risks do materialise.”
Smith went on to cite an example of a cyberattack hitting the financial sector, adding that the impact on the sector could have major repercussions for the economy.
This was due to the fact that the financial sector is considered the heart and lungs of the economy.
“We are regularly seeing bank systems going down, for example, as migration to new a system takes place and these typically lead to the inability for clients to transact; a more widespread collapse in the payments systems following an attack could be disastrous,” he said.
Another point Smith highlighted was the impact of a market crash, explaining that for cities around the world, the risk of a market crash is about 40 percent higher than their next highest risks.
He concluded by stressing the need to not underestimate the panic often associated with such dangers and disasters, should they materialise.
“A natural disaster and the linkages of a cyberattack to a Gross Domestic Product crash must be factored in to all risk modelling.”
