Perhaps unsurprisingly, geopolitical risks, trade tensions, inflation and cyber risk were flagged as the most significant threats to the financial services eco system in the coming year, according to the DTCC’s annual Systemtic Risk Barometer Survey.
Breaking the results down, 68% put geopolitical risks and trade tensions top of the list, up from 49% last year, as tensions around the world continue to impact global markets.
”The results of the survey reflect the significant impact of geopolitical instability as a driver of risk and economic uncertainty,” said Ali Wolpert, DTCC managing director, head of global government relations.
She added, “This outcome reflects the ongoing conflict in Europe, coupled with
concerns about the increased complexity of a rapidly changing world order and expected
tensions in the APAC region.
Any escalation of these conflicts could have a profound effect on the global economy and global policy agenda.”
Concerns over inflation though saw the highest jump with 61% compared ro 34% last year putting it high on the agenda.
Respondents cited unknowns around how long inflationary pressures may last, as well as the impact of monetary policy and supply chains as key drivers.
By contrast, respondents were less worried about cyber risk with 47% mentioning it versus 59% last year..
This was due to the growing sophistication of threat actors, the proliferation of new technology adoption and an increasingly interconnected marketplace.
Nearly three years since the start of the pandemic, most respondents no longer consider COVID-19 a top threat to the industry, as case numbers decline, and vaccine availability continues to increase.
“The dramatic increase in concerns around geopolitical risks & trade tensions, inflation and U.S. economic slowdown reinforce how quickly the threat landscape evolves and the importance of regularly monitoring the external environment to gain intelligence into potential shocks to market stability,” said Michael Leibrock, chief systemic risk officer at DTCC.
He added, “As a result, firms must continually review their risk management practices and procedures, conduct scenario planning exercises and ensure their operating structure is nimble to protect themselves and the broader industry.”
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