Bafin Warns of Rising Cyber Threats and Climate Risks for Financial Sector

Germany’s financial regulator urges banks and insurers to enhance IT security and address sustainability challenges as risks escalate.

The Bafin reports a significant increase in IT incidents, with 258 cases in the first three quarters of 2024, highlighting growing cyber risks fueled by geopolitical tensions and advanced technologies like generative AI.
Financial institutions, as part of critical infrastructure, are increasingly targeted by state-sponsored cyberattacks, raising concerns about systemic vulnerabilities.
Bafin calls on banks and insurers to reinvest strong 2024 earnings into bolstering IT security to meet customer and regulatory expectations.
The regulator emphasizes that climate change is driving higher physical risks, such as natural disasters, which are impacting credit portfolios and insurance claims.
Economic challenges in Germany, including a second consecutive recession and rising corporate bankruptcies, are expected to increase the proportion of problematic loans in 2025.