When the Primary Environment Can No Longer Be Trusted: Why the Bank of England Is Putting Recovery at the Center of AI Risk
What Happened
The Bank of England is increasing its focus on whether financial institutions can recover from a cyberattack that compromises not only individual systems, but trust in the underlying technology environment itself.
On October 15, Deputy Governor Sarah Breeden highlighted the need for banks to develop recovery capabilities that do not depend on their primary infrastructure. One of the approaches being explored is bare-metal recovery. the ability to rebuild critical systems from a clean, trusted state.
The concern reflects the accelerating offensive capabilities of AI. Agentic systems can increasingly combine multiple actions, identify vulnerabilities and support operations at a scale and speed that reduces the time available to defenders.
The Bank of England is considering this not only as a risk to individual institutions, but as a potential financial stability issue.
What Bare-Metal Recovery Means
Traditional disaster recovery often assumes that core recovery mechanisms, backup infrastructure and management systems remain trustworthy.
A severe cyberattack can invalidate that assumption.
An attacker may have gained access to:
privileged accounts;
identity infrastructure;
virtualization management;
backup consoles;
configuration management;
recovery credentials;
administrative tooling;
the backups themselves.
In that scenario, the question is no longer simply:
“Do we have a backup?”
It becomes:
“Do we still have an environment we can trust?”
Bare-metal recovery means being able to rebuild critical systems onto clean infrastructure when the existing environment has to be treated as potentially compromised.
Backup and Recovery Are Not the Same Capability
Having a copy of data is only one component of recovery.
Organizations also need to know:
whether backups remained intact;
whether they contain persistence or compromised configurations;
which versions can be restored safely;
how identity and privileged-access systems will be rebuilt;
in what order critical services need to return;
who has authority to initiate recovery;
how the restored environment will be validated before it is trusted again.
This is particularly relevant to ransomware and destructive attacks, where adversaries may deliberately target backup and recovery infrastructure before triggering the disruptive stage of the operation.
Why AI Changes the Recovery Strategy
The central issue is not that AI creates an entirely new category of cyberattack.
The more important change is the speed and scale at which familiar activities can be carried out.
Agentic AI can support vulnerability discovery and chaining, environmental reconnaissance and sequences of actions with decreasing levels of human intervention.
This increases the possibility that an attack can spread across systems, providers or organizations before defenders contain the initial access.
That is why the Bank of England is considering cyber resilience at a system-wide level. Strong defenses remain necessary, but they cannot be the only assumption.
Organizations also need to prepare for the scenario in which those defenses fail.
Recovery Must Be Independent of the Compromised Environment
This creates an important operational lesson.
If the recovery plan depends on the same identity services, management systems, cloud accounts or administrative credentials already controlled by the attacker, that plan may fail precisely when it is needed.
For critical environments, organizations therefore need to consider:
independent recovery credentials;
offline or logically isolated backups;
separate administrative paths;
clean recovery environments;
protection of identity recovery processes;
predefined sequencing for critical service restoration;
regular exercises based on full-compromise scenarios.
A recovery plan that has never been tested without the primary environment contains an assumption, not evidence.
What Organizations Should Review
The relevant question is no longer only whether backups exist.
Organizations should examine:
whether production credentials can access backup infrastructure;
whether immutable or offline copies of critical data exist;
whether identity services can be rebuilt independently;
whether alternative recovery access exists when administrative accounts are compromised;
whether the restoration sequence for critical services is documented;
whether configuration and dependency information is stored outside production;
how long recovery actually takes;
when a full-compromise recovery scenario was last tested;
how the organization establishes that the restored environment is clean before returning it to production.
DIAMATIX Comment
From the DIAMATIX perspective, the critical change is the assumption behind the recovery strategy.
During a conventional operational failure, the primary environment may be unavailable.
During a serious cyber incident, it may be untrustworthy.
That distinction matters.
If privileged identities, management systems or backup infrastructure were part of the compromise, conventional restoration can bring back both the systems and the problem.
Cyber recovery therefore needs to begin with:
“What environment can we safely recover from?”
and only then:
“How quickly can we recover?”
Recovery time remains important. But during a cyberattack, speed without assurance can result in repeated compromise.
Practical Takeaway
The Bank of England is raising a question that applies well beyond banking:
Can an organization restore its critical services when it can no longer trust its own primary infrastructure?
That is the next level of cyber resilience.
The operating model moves beyond:
protect → detect → respond
to include:
recover from a trusted state.
Backup demonstrates that a copy exists.
Recovery demonstrates that operations can return.
Cyber recovery has to demonstrate something more. that the environment being restored can be trusted again.
Assess whether your recovery strategy still works when the primary environment itself is compromised.
Sources
Reuters. Banks need ‘bare metal’ recovery in face of AI risks, says BoE’s Breeden, 15 October 2026.
Bank of England. Sarah Breeden, Agents of change, speech at the European Central Bank Forum on Central Banking, 30 June 2026.
Bank of England. Andrew Bailey, speech on growth and regulation, July 2026.
Bank of England. Andrew Bailey, Financial resilience in an age of repeated shocks, 8 October 2026.
