mlsanityData to 14 Oct 2026

Cyber-Financial Contagion: Modeling the Propagation of an AI Vendor Compromise Through the Banking System

arXiv 2609.10350 ↗First posted 9 Sep 2026cs.AI cs.CY cs.LGcited by 1

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Abstract (arXiv)

The banking system now depends on a small set of shared artificial intelligence vendors for fraud screening, credit decisioning, anti-money-laundering triage, customer analytics, and internal decision support. This paper studies how a compromise inside one of those vendors can propagate along a chain of operational, informational, and financial linkages until it triggers losses that look, from the outside, like a classical banking crisis. We build a four-layer heterogeneous network that couples AI vendors, financial institutions, interbank exposures, and customer accounts, and we propose CFC-Prop, a stochastic epidemic-and-clearing model that runs on that network. On a synthetic dataset with 60 vendors, 220 banks, roughly 2,500 vendor-bank service edges, and 1,400 interbank exposures, CFC-Prop reproduces the heavy-tailed loss distributions and the sharp dependence on patch latency that are consistent with prior cyber-financial evidence. We also train an early-warning model, CFC-GNN, that uses vendor-side incident telemetry and graph structure to flag high-cascade-risk vendors before impact. Across four baselines the proposed model reaches AUROC 0.82 and AUPRC 0.60 while keeping calibration errors bounded. We release the full code, synthetic data, and reproducible scripts. The results argue that cyber concentration among AI vendors is a first-order financial-stability problem and give supervisors a concrete quantitative tool for reasoning about it.

Key facts. Cited by 1 paper in the map (data through 14 Oct 2026). Builds on 11 of its 51 references that are in the map. First posted on arXiv 9 Sep 2026.

Builds on

11 of 51 references.

References · 11

  1. 2016Semi-Supervised Classification with Graph Convolutional Networkscited by 11,361
  2. 2017Graph Attention Networkscited by 8,923
  3. 2017Inductive Representation Learning on Large Graphscited by 6,320
  4. 2016Membership Inference Attacks against Machine Learning Modelscited by 2,281
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  6. 2017BadNets: Identifying Vulnerabilities in the Machine Learning Model Supply Chaincited by 1,106
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  9. 2014Epidemic processes in complex networkscited by 58
  10. 2026ThreatFormer-IDS: Robust Transformer Intrusion Detection with Zero-Day Generalization and Explainable Attributioncited by 2
  11. 2026Calibrated Credit Intelligence: Shift-Robust and Fair Risk Scoring with Bayesian Uncertainty and Gradient Boostingcited by 2

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