European Systemic Risk Board warns frontier AI models could intensify systemic cyber risks in EU finance

The European Systemic Risk Board has issued a warning on systemic cyber risks from frontier AI models, saying they are reshaping the cyber threat landscape for the EU financial system. The warning follows the ESRB General Board’s assessment of systemic cyber risk as severe in June, up from elevated in March. In the ESRB’s view, these models can materially affect cyber operations and, in the short to medium term, may give threat actors an advantage by increasing the speed, scale and sophistication of attacks, which authorities should reflect in supervisory and oversight work. The warning also points to strategic dependency and geopolitical risks because leading AI providers are concentrated outside the European Union. The General Board called for the EU to build capacity, expertise and strategic autonomy in this area through a coordinated response involving AI and software providers, security firms, open-source maintainers, financial institutions and authorities at national and Union level. The ESRB also welcomed a separate ECB Banking Supervision letter to chief executive officers of significant euro area banks that sets supervisory expectations for the evolving AI-related cyber threat landscape, and approved publication of an analytical note on frontier AI models with cyber capabilities from a financial stability perspective. The ESRB said it will continue monitoring the development and use of frontier AI models with cyber capability and their effects on the financial sector. The General Board will reassess developments in its quarterly risk assessments and consider further action within its remit if needed.