Banks need 'bare metal' recovery in face of AI risks, says BoE's Breeden

Bank of England Deputy Governor ‌Sarah ​Breeden said on Thursday the central bank was working with banks on deep cyber-recovery options, arguing that lenders can no ‌longer assume their defences are impenetrable in the face of AI-enabled cyber attacks. Breeden also warned that AI advancements had reached a level where the technology posed a "systemic risk" to ‌global financial infrastructure.

"It's not enough now to assume that the cyber attackers won't get ‌through....We need to be thinking about what are the bare metal recovery options...that we need for the core services, and we need to think about that end-to-end across the financial system," she said at ⁠the Institute ​of International Finance annual ⁠meeting in Bangkok. So-called 'bare metal' systems are entirely independent from a bank's main tech set-up and can kick ⁠in if primary operating systems are compromised.

Banking regulators globally are stepping up efforts to contain growing ​AI risks, including in Britain where supervisors have been encouraging the largest banks ⁠to examine bare metal recovery plans, Reuters reported on Tuesday. Breeden also warned that the risks of larger ⁠and ​more complex cyber attacks had grown due to AI developments.

"The basics of cyber hygiene... those are more important than ever," she said. "Cyber is always the thing ⁠that I say keeps me up at night. What is the thing that I worry ⁠about the most is ⁠waking up and one of our most systemically important banks or a bit of core infrastructure has been attacked and is paralysed."