Australian regulators are urging insurers to take “decisive action” as new artificial intelligence tools magnify the threat of cyberattacks.

Frontier AI lifts the speed, scale and sophistication of breaches, and is accelerating operational risk for financial services companies, the Australian Prudential Regulation Authority and Australian Securities and Investments Commission say in a joint statement.

ASIC commissioner Simone Constant says boards and executives must “move beyond awareness” and ensure they have well-tested plans and understand where they are vulnerable, so they can respond effectively under pressure.

“The urgency of this challenge cannot be overstated,” she said. “Threat actors are exploiting frontier AI models to identify and exploit vulnerabilities that previously may have taken a team of professionals months to find.”

APRA warned in April that AI can “create new risks and escalate old ones”, and called for a change in how insurers manage the threat.

Alongside ASIC, it hosted nine roundtables in June and July involving more than 600 attendees exploring how to navigate an evolving risk environment.

They examined cybersecurity fundamentals, including managing critical systems, patching, identity and access controls, attack surface reduction, back-ups, response and recovery arrangements, and third-party risk management.

Also discussed was escalation authority and communication strategy.

APRA deputy chair Therese McCarthy Hockey has commended a willingness to share practical insights, lessons and approaches as “precisely the type of ‘team Australia’ mindset needed to shore up resilience across our highly interconnected financial system”.

Regulators say directors should demonstrate they can respond and recover quickly after AI-fuelled security breaches, while still meeting governance, operational resilience and third-party management obligations.

See findings from the roundtables, including a checklist for boards, here.

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