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By Steve Slater
LONDON, Feb 5 (Reuters) - Britain's financial, transport andenergy industries said they will strengthen their defencesagainst cyber attacks, building on a war-game simulation wherebanks came under assault from "a hostile nation state".
Cyber attacks are increasing in regularity and severity as"hacktivists" and criminals become more sophisticated. Banks arefrequently targeted by co-ordinated online assaults or hacks onspecific lenders.
London's financial community tested its resilience in awar-game simulation in November, when investment banks andexchanges were tested against a concerted cyber attack "by ahostile nation state with the aim of causing significantdisruption/dislocation", the Bank of England (BoE) said onWednesday in a report on findings from the event.
About 220 bankers, regulators, government officials andmarket infrastructure providers took part in the exercise,dubbed "Waking Shark II". A similar exercise was held in 2011,and New York also held one last year, called "Quantum Dawn 2".
The simulated attacks disrupted services, wiped data andcaused liquidity and funding issues for investment banks, theBoE said. There were also problems with payments, calculatingovernight risk and margins, and clearing trades.
The BoE said the one-day exercise was a successful test ofsystems and any future test may include retail bankingoperations.
The report coincided with a meeting on Wednesday of UKlawmakers and regulators from Britain's financial, transport andenergy sectors, as well as from its telecoms and waterindustries. They pledged to lay out a common set of objectivesto protect essential services in the event of attack.
British Business Secretary Vince Cable said cyber securitywas "a top tier national security priority".
RBS ATTACKED
In December state-backed Royal Bank of Scotland saidits platform was briefly attacked by hackers, causing problemsfor customers accessing accounts.
One unidentified London-listed company incurred losses of800 million pounds ($1.3 billion) in a cyber attack severalyears ago, according to British security services.
Cyber criminals, extortionists and hacktivists - politicallymotivated hackers - may also be trying to influence share pricesand interfere with commodity exchanges with the use of theirdistributed denial of service (DDoS) attacks.
"Since 2011, and growing in 2012 and 2013, DDoS attackcampaigns have become a significant threat to financial firms,"security firm Prolexic Technologies said in a recent report.
DDoS attacks bombard websites with huge volumes of trafficfrom multiple systems so they overload a server.
It can be hard to track the root of the attacks and it isoften not clear why they take place - they may have no motive orcould be a show of dissent by disgruntled customers oranti-capitalist protesters.
Prolexic said attacks on multiple U.S. securities andcommodity exchanges ran for three months in 2012, co-ordinatedby a group that claimed to support the Occupy Wall Streetmovement and was critical of international banks.
