The emergence of frontier AI models in April 2026 has changed the cyber-risk landscape, according to a new CEPR VoxEU analysis by Eric Törnqvist and Jerzy Kopiński. The authors argue that advanced AI systems can autonomously execute cyber operations and reduce vulnerability-exploitation timelines from days or weeks to hours or minutes. This creates a growing challenge for financial institutions, particularly those operating complex technology environments built over decades, where identifying, prioritising and fixing vulnerabilities in real time can be difficult.
The analysis identifies three structural asymmetries: between jurisdictions, between attackers and defenders, and between less and more capable financial institutions. The authors argue that Europe’s dependence on foreign-controlled cloud services, computing capacity, specialised software, advanced hardware and frontier AI could turn technological dependence into strategic dependence. They also point to the European Systemic Risk Board’s June 25, 2026 warning on systemic cyber risks from frontier AI models and its subsequent elevation of cyber risk to its highest risk level.
The authors argue that the issue extends beyond cybersecurity because insufficient defensive AI capability could increase operational risk, funding costs and technological dependence, potentially affecting financial-sector competitiveness and resilience. They point to existing frameworks including DORA, the Cyber Resilience Act and the AI Act, but argue that regulation alone cannot address the underlying capability gap. Their analysis calls for greater risk capital, investment in infrastructure, retention of AI talent and development of domestic frontier technologies to strengthen Europe’s strategic and operational autonomy.
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