DFSA Report Highlights Cyber and AI Risks in Financial Services

Strengthening Oversight Through International Dialogue." This report offers crucial insights into the rapidly changing landscape of digital risks and discusses how new technologies, particularly Artificial Intelligence (AI) and quantum computing, are influencing regulatory efforts by enabling the rapid resolution of complex issues compared to conventional computing methods.

This report emerges in the wake of the DFSA's first Cyber and AI Risk Regulatory College held in May 2025, which saw the participation of 70 senior officials from 18 financial regulatory bodies spanning regions such as the Middle East, North America, Europe, Africa, and Asia. The college served as a vital platform for global discussions concerning the increasing complexity of cyber threats, the uptake of AI, and the long-term effects of quantum computing on the financial industry.

Justin Baldacchino, Managing Director of Supervision at the DFSA, stated that digital risks are shifting from being a peripheral concern to a systemic issue. He expressed that the report encapsulates a shared understanding among regulators about the convergence of these risks and the evolution of regulatory strategies. The DFSA is enthusiastic about fostering ongoing, impactful conversations with both regional and global partners to ensure a secure and resilient financial system.

the landscape of cybersecurity threats, the implications of quantum computing, and the risks emerging from AI technologies. It compiles insights from around the world and engages with expert conversations on how financial regulators might tackle these new challenges while still promoting innovation within the industry.

Key themes presented in the report include an increase in both the frequency and sophistication of cyberattacks, especially those that exploit new technologies and supply chain vulnerabilities. It also discusses the threat posed by quantum computing to existing encryption methods used in critical communications and underscores the necessity for early, coordinated efforts to adopt post-quantum cryptography—the algorithms meant to remain secure against quantum threats.

Additionally, the report emphasizes that as financial services increasingly integrate AI, there is a pressing need to improve methods for explainability and interpretability, establish rigorous oversight for third-party risks, and implement responsible governance practices. Herman Schueller, Director of Innovation and Technology Risk Supervision at DFSA, remarked on the swift pace of innovation and highlighted the global effort among financial regulators to adapt their oversight practices effectively. He also pointed out the importance of open, cross-national dialogues in enhancing mutual comprehension of the regulatory, technical, and operational aspects of digital risks.