Bank of England studies insurer exposure to Russian sanctions, eyes cyber defences

By Huw Jones and Carolyn Cohn

LONDON (Reuters) – The Bank of England said on Wednesday it was examining exposures of Britain’s insurers to fallout from financial sanctions on Russia and also issued a reminder of the need to have proper defences against cyber attacks.

Britain, the European Union, United States and other countries have agreed on a welter of sanctions on Russian banks and its central bank following Russia’s invasion of Ukraine.

Heightened geopolitical tensions have raised fears of cyber attacks on western financial institutions.

“What we are doing is going through with firms what the nature of their exposures may be, both direct and indirect, and working very closely with the Treasury,” Charlotte Gerken, executive director for insurance at the BoE told an event held by Norton Rose Fulbright law firm.

Aviva CEO Amanda Blanc said on Wednesday that the insurer’s fund unit had a very small exposure to Russia and it was looking to divest.

The BoE has said that exposures of banks to Russia are relatively low. Gerken declined to comment on any individual firms.

Setting out priorities for the insurance industry over the coming year, Gerken singled out resilience to cyber attacks, the need to quantify the impact of climate change, and more diversity in boards and management.

“We expect firms to be able to demonstrate their operational ability to withstand and recover from severe but plausible scenarios such as ransomware attacks,” Gerken said.

Cyber risk continues to haunt all businesses and having a cyber insurance policy does not substitute the need for a robust framework to manage cyber risk, she said.

While some insurers have made progress in adapting to risks from climate change, some have gone further than others, Gerken said.

“From 2022, we will shift to actively supervising climate risk,” she said.

(Reporting by Huw Jones and Carolyn Cohn;Editing by Elaine Hardcastle)