Call for finance to be “hardwired” into national security

The UK’s financial services sector is facing calls for a stronger focus on defence and security in the broadest sense, with the Financial Conduct Authority’s CEO Nikhil Rathi cautioning that “separating financial services from national security is outdated and dangerous,” and arguing that “resilience is profitable.” In his speech to the Corporation of the City of London’s annual City Dinner, Rathi said: “Conflict today hits balance sheets, funding, markets and consumers as much as any battlefield. And we are not prepared, tactically or strategically.

“Whether it’s a cyber-attack or a production shock – they move yields and test confidence. Protection gaps shake market integrity. Britain will not remain secure nor competitive if we treat finance as separate from our security – and if investors treat defence as separate from growth.”

His comments were made as the Cyber Monitoring Centre released an analysis of the Jaguar Land Rover (JLR) cyber incident earlier this year, which it estimated has caused a UK financial impact of £1.9 billion and affected over 5,000 UK organisations.

In contrast, Rathi argued that “Power stability, secure data, cyber protection – these are cash generating growth markets,” saying that “rebalancing risk must be for all Executives and Boards.”

Rathi identified a “protection gap”, saying many organisations were potentially massively underinsuring. “Globally, a fraction of catastrophe and cyber risks are insured. The rest migrate to company P&Ls, credit ratings, risk premia, prices, and ultimately to households.

“And when cover is thin, it hits the Exchequer. That, along with the impact on livelihoods, drives popular anger.”

Secondly, there is a investment gap, with domestic capital resources reluctant to invest in innovative new approaches to autonomy, resilient networks, and advanced engineering, leaving a space that is filled by overseas investors.

In conclusion. Rathi called on UK financial services firms to step up, saying they should “back British capability. Co-invest in firms and supply chains that can scale; don’t leave the rewards to overseas capital.

“And, finally, close your protection gaps, not just because our rules require it. Measure operational and cyber exposures; build products, hedges and cover that protect them.

“In short: let’s stop waiting for government to carry this. Defence and resilience aren’t costs outside your business model; they’re growth markets you can shape.”