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

BoE Warns Banks on AI-Driven Cyber Risks, Urges 'Bare Metal' Recovery Plans

Bank of England Highlights Systemic AI Cyber Threats and Recovery Strategies

Central Bank's Stance on AI-Enabled Cyber Attacks

BANGKOK/LONDON, Oct 15 (Reuters) - 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.

Importance of 'Bare Metal' Recovery Options

"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.

Definition and Role of 'Bare Metal' Systems

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.

Regulatory Response to Growing AI Risks

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.

Rising Complexity of Cyber Attacks

Breeden also warned that the risks of larger and more complex cyber attacks had grown due to AI developments.

Cyber Hygiene and Systemic Concerns

"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."

(Reporting by Phoebe Seers and Rae Wee, Editing by Iain Withers and Toby Chopra)