Frontier AI models could strain cyber resilience in the financial system, ESRB warns

The European Systemic Risk Board (ESRB) published today a warning on systemic cyber risks stemming from frontier AI models. This warning comes after the ESRB General Board assessed systemic cyber risk as "severe" in June, up from "elevated" in March.

Frontier AI models are advanced AI models capable of materially affecting offensive or defensive cyber operations. The ESRB warning explains how these models are reshaping the cyber threat landscape, assesses the resulting systemic risks and outlines implications for public authorities and private financial institutions.

Frontier AI models are a paradigm shift for cybersecurity. Eventually, these models are likely to strengthen cyber resilience. In the short to medium term, however, they provide an advantage to threat actors, enabling them to discover vulnerabilities and execute cyberattacks with increased speed, scale and sophistication. In addition, the concentration of leading AI providers outside the European Union exposes the EU to strategic dependency and geopolitical risks.

In order to reinforce the warning’s message, the General Board calls on the EU to scale up its capacity, expertise and strategic autonomy in this critical area. This requires a coordinated answer of all parties, including AI providers, software providers, security firms, open-source maintainers, financial institutions and authorities at both national and Union level.

Reflecting this, the ESRB welcomes the letter to CEOs of significant euro area banks from ECB Banking Supervision, also published today. The letter sets out supervisory expectations for addressing the evolving AI-related cyber threat landscape.