Bank of England Warns Cyber Risk Now Top Threat to UK Financial System

The Bank of England used its July Financial Stability Report to warn that cyber risk has intensified and now ranks as one of the most pressing threats to the UK financial system. The bank's 2026 first-half Systemic Risk Survey found that 82% of banks, insurers and asset managers cited cyberattacks as a top-five risk, underscoring how heavily critical financial services depend on complex digital infrastructure and shared third-party technology. Officials cautioned that rapidly advancing frontier AI models could accelerate the discovery and exploitation of vulnerabilities, creating potential system-wide consequences through correlated exposures at common suppliers. The report reinforced the importance of a joint statement issued in May by the Bank, the Financial Conduct Authority and HM Treasury on frontier models, and pointed to the newly launched oversight of Critical Third Parties, which began in mid-July. The Financial Policy Committee kept the countercyclical capital buffer at 2%, noting that global risks had risen amid geopolitical tensions, trade fragmentation and sovereign-debt pressures, even as domestic indicators stayed near long-run averages. It also recommended reviewing the loan-to-income limit on mortgage lending to ensure lenders can use it more fully.