Nikhil Rathi (pictured), chief executive officer of the Financial Conduct Authority, has said UK businesses are running the risk of being “massively” underinsured in relation to the cyber exposures they face. Speaking at the Corporation of the City of London’s annual City Dinner he said it was imperative that financial services and insurance were an integral part of the UK’s national security.

Rathi said: “Assets likely to be hit are privately held. When they fail, the loss is large, fast and connected. The Jaguar Land Rover cyber incident showed how one shock ripples through the economy: An estimated £1 in every £160 of UK GDP tied to one firm and its supply chain.

“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. We are potentially massively underinsuring.”

Rathi highlighted the UK’s demonstrated insurance expertise and said the FCA would continue to shine a light on both the risks and opportunities generated by advancing technology.