E-commerce offers the banking industry great opportunity, but also creates a set of new risks and vulnerability such as security threats. Information security, therefore, is an essential management and technical requirement for any efficient and effective financial activities over the Internet. Still, its definition is a complex endeavor due to the constant technological and business change and requires a coordinated match of managerial and technical solutions. This research intends to provide an instrument to test and evaluate the strategies to counter threats facing online financial institutions through an artificial economic setup at the Synthetic Environments for Simulation and Analysis (SEAS) laboratory at the Krannert Graduate School of Management, Purdue University. The research also intends to provide guidelines for forming information security policies and strategies for survival and success in the dynamic and hostile business environment. Initial results indicate that online banks that were proactive in recognizing the threats and devising policies to counter them generated greater revenue and were able to focus on the core activities. Public disclosure of security breaches by the victim banks resulted in better overall health of the simulated economy. The simulation is still in its development and testing phase and the research team intends to present the findings at the conference.