The European Central Bank is set to conduct its inaugural thematic stress tests focused on evaluating the cyber resilience of individual banks. These tests, involving 109 supervised banks, will simulate a scenario where a cyberattack successfully disrupts the daily business operations of each bank.

During the tests, banks will evaluate their response and recovery measures, which include activating emergency procedures, implementing contingency plans, and restoring normal operations. Unlike traditional stress tests that assess a bank's ability to prevent a cyberattack, this exercise specifically aims to gauge how effectively banks can respond to and recover from such an incident.

As part of the program, 28 banks will undergo an enhanced assessment, requiring them to submit additional information detailing how they managed the simulated cyberattack. This diverse sample, covering various business models and geographical locations, aims to provide a comprehensive reflection of the Eurozone banking system, ensuring efficient coordination with other supervisory activities.

These stress tests underscore supervisory authorities' concerns regarding the potential for disruption and financial instability resulting from a significant cyber attack on the banking sector, which increasingly relies on digital technology for its operations. In October, Lloyd's of London warned that a major cyber attack on a systemic payments system could incur a staggering cost of $3.5 trillion on the world economy.

The European Central Bank has previously conducted targeted stress tests, including a deep dive into interest rate risk sensitivity analysis in the banking book in 2017, liquidity risk sensitivity analysis in 2019, and a climate risk stress test in 2022.