The European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) have identified external dependencies, emerging technologies and private credit as key vulnerabilities for the EU financial system in their Autumn 2026 risk update.
Europe’s Supervisors Flag Reliance on Non-EU Providers
The key findings of Autumn 2026 Joint Committee update on Risks and Vulnerabilities were presented at the meeting of the Financial Stability Table of the EU’s Economic and Financial Committee (FST-EFC) on 10 September 2026. There is ongoing strong reliance on non-EU ICT service providers and payment systems. Dependence on non-EU service providers also remains visible in financial infrastructures, with clearing, repo and credit ratings markets largely intermediated by non-EU entities. Investment funds have substantial exposures to the US, particularly equity UCITS and alternative investment funds, while bond funds are more geographically diversified. Dependence on ICT service providers outside the European Economic Area remains a particular concern, alongside growing cyber risks linked to increasingly capable AI models. The ESAs’ own account of the report is available in full via the joint statement covering external dependencies, cyber threats and private credit risks.
AI-Amplified Cyberattacks Test Underwriting Models
The rapid development of advanced AI systems could make cyberattacks more powerful and harder to contain, allowing malicious actors to identify and exploit vulnerabilities at unprecedented speed. In the insurance sector, exposure also arises through cyber-insurance underwriting. In a context of severe geopolitical instability, added frequency and severity of orchestrated AI-enabled cyberattacks could increase claims and accumulation risks for insurers, though exclusion clauses could limit the impacts on the sector. For readers who follow the systemic side of that threat, InsuraBeat has separate coverage of the ESRB’s warning on frontier-AI systemic cyber risk.
Technology cuts both ways in the same report. Quantum computing, another rapidly developing technological area, could soon transform the financial sector in key areas by optimising financial processes, fraud and compliance monitoring, as well as pricing.
Private Credit’s Blind Spots Move Onto the Supervisory Radar
Although the sector remains relatively small in the EU, its rapid growth, limited transparency and increasing links with the wider financial system could create risks during periods of stress. Liquidity mismatches in private credit funds could amplify redemption pressures and generate spillovers to banks through funding and common exposures. For readers who follow how EEA insurers are positioned in that market, InsuraBeat has separate coverage of EIOPA data on EEA insurers’ private-asset holdings.
Insurers’ Fundamentals Hold While Catastrophe Gaps Widen
Investment funds, insurers and banks continue to show strong fundamentals, although geopolitical tensions, cyber threats, natural catastrophes and technological developments continue to shape the outlook. EU equities reached record highs even amid the geopolitical tensions in the Middle East. European banks continued to operate from a position of strength, with strong profitability and high capital ratios supported by organic capital creation. That balance holds for insurance specifically. Fundamentals in the insurance and pension sector stayed strong, and capital and funding positions strengthened, however, more frequent natural catastrophes could widen protection gaps, reinforcing the need for stronger action on adaptation.
In the insurance sector, global interconnectedness is contained overall and is primarily asset- and reinsurance-driven.
ESAs Joint Committee, Autumn 2026 risk update
For readers who follow how that systemic dimension is tracked elsewhere, InsuraBeat has separate coverage of IAIS’s mid-year assessment of solvency and systemic risk trends.
What Supervisors Are Asking Firms to Do Next
The ESAs call on supervisors and market participants to strengthen their preparedness and continue closely monitoring risks stemming from external dependencies, private credit and emerging technologies. Given the ongoing geopolitical risks, the Joint Committee of the ESAs calls on supervisors and market participants to strengthen resilience through crisis preparedness, resolution coordination, and more effective and adaptable regulation. The full Autumn 2026 Joint Committee update on risks and vulnerabilities sets out the underlying detail behind each of these calls.
