The EBA (European Banking Authority), EIOPA (European Insurance and Occupational Pensions Authority) and ESMA (European Securities and Markets Authority) have endorsed the warning issued by the European Systemic Risk Board (ESRB) regarding the systemic risks that cutting-edge artificial intelligence models may pose to the European financial system.

According to the authorities, these models are capable of identifying and exploiting cyber vulnerabilities more rapidly, by automating offensive activities that previously required more time and specialist expertise. This results in an increase in the speed, scale and sophistication of attacks, with banks, insurance companies and intermediaries being particularly exposed.

The risk can become systemic when multiple operators rely on the same ICT providers, cloud services, AI models or software components. A breach of a shared infrastructure could, in fact, spread rapidly across numerous financial entities and affect the continuity of essential services.

The European supervisory authorities for the banking, financial and insurance sectors therefore urge financial firms to update their cybersecurity frameworks, strengthen vulnerability management, reduce patch deployment times and conduct scenario-based tests in which attackers utilise advanced AI systems. These risks must be integrated into the operational resilience measures already required by the DORA Regulation, including third-party vendor oversight, incident management and digital resilience testing.

Supervisory authorities are also called upon to incorporate developments in AI into their supervisory activities, assessing both the direct use of models by firms and the threats arising from their use by hostile actors.

The EBA, EIOPA and ESMA will continue to monitor the development of cutting-edge models, working in collaboration with national authorities and ICT providers. The message is clear: AI can strengthen defensive capabilities, but in the short term it can also amplify cyber risk and turn it into a threat to the stability of the entire financial system.