Crypto Exposure May Impact Financial Firms' Risk Profiles: Allianz

Allianz's report looked at the proliferation of new technologies and the impact they may have on any company’s risk profile.

AccessTimeIconMay 17, 2021 at 12:24 p.m. UTC
Updated Sep 14, 2021 at 12:56 p.m. UTC

Exposure to cryptocurrency could have a "profound" impact on the risk profiles of financial institutions, according to a new report by insurance giant Allianz.

Firms that offer crypto services in the form of trading or custody “will face the prospect of potential third-party liabilities,” said Ed Williams, global head of financial lines at Allianz Global Corporate and Speciality (AGCS).

With the merging of digital currencies and traditional finance, institutions will be exposed to the uncertainties of the crypto sphere, “with questions around potential asset bubbles and regulation” and “concerns for potential money laundering and the risks of theft or loss of access,” according to Williams.

This forms part of the report’s wider conversation around the proliferation of new technologies and the impact they have on any company’s risk profile.

Allianz draws comparisons with artificial intelligence (AI), robotics and biometrics threatening risk to financial firms that harness them for the purpose of credit scoring, for example.

“With each new technology, we move the goalposts and potentially increase the attack surface for cyber criminals,” said Marek Stanislawski, AGCS’ global cyber underwriting lead. “For example, there are a lot of potential benefits to digital and virtual currencies, but they also can help fuel cybercrime, extortion and ransomware.”


Read more about

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Investing in the Future of the Digital Economy
October 18-19 | Spring Studio, NYC