The European Central Bank (ECB) plans to conduct a pioneering stress test in 2024 on systemic banks of the Eurozone, including Cypriot banks such as Bank of Cyprus and Hellenic Bank. This exercise aims to evaluate their response to a potential successful cyberattack.

The French News Agency reports that the critical scenario set by the ECB assumes that a bank has been "hit by a successful cyberattack disrupting its daily operations."

Approximately 109 banks will participate in the test to assess their means of "responding to and recovering from a cyberattack, rather than their ability to prevent one," the ECB notes.

The exercise will scrutinize the financial institutions' emergency procedures and their plans to restore normalcy after such an attack.

A subgroup of 28 banks across the Eurozone will undergo a more stringent test, examining the risks from cyberattacks that could spread to other sectors.

The results of the exercise, to be published later in the year, will not impact the banks' obligations to create additional capital reserves against financial risks, adds the ECB.

The ECB conducts annual stress tests on supervised banks to evaluate their readiness to face adverse events.

While most stress tests have focused on adverse economic and financial scenarios, the ECB has also conducted tests on banks for climate conditions.

According to AFP, the cyber resilience tests were announced last year, as the risk of hacking attempts increased following the pandemic and Russia's invasion of Ukraine.

"The number of cyberattacks is higher than before the pandemic," stated Anneli Tuominen, a member of the ECB's Supervisory Board, last year to the German newspaper Boersen Zeitung.

She noted a significant increase in "denial-of-service attacks, where perpetrators disrupt banking services by overwhelming and clogging bank servers with false requests."

Tuominen also mentioned a rise in ransomware attacks, where banks are asked to pay money to regain access to their data.

"Eurozone banks have proven resilient so far," said Tuominen, warning that "a successful attack could happen at any time."

The next round of the ECB's standardized stress tests, aimed at assessing banks' ability to handle various financial risks, is scheduled for 2025.