DTCC Connection

Dec 07, 2015 • DTCC Connection

DTCC Systemic Risk Survey Highlights Industry Concerns

By Michael Scotti

Q3 Systemic Risk Connection



The likelihood of a “high-impact event” to the global financial system has increased over the last six months, according to findings released by The Depository Trust & Clearing Corporation (DTCC) in its Q3 2015 Systemic Risk Barometer Survey.

The DTCC Systemic Risk Barometer Survey found that 45% of respondents believe there is an increased probability for a “high-impact event” in the next 12 months. The previous survey conducted in Q1 2015 found that just 29% were of the same opinion.

The Systemic Risk Barometer Survey is a semi-annual pulse check that monitors emerging trends on risks that may impact the safety and resiliency of the global financial system. DTCC’s primary role in financial services is to lessen risk and ensure financial stability. Among the questions, the survey provided a list of 20 systemic risks, which could all be considered potential high-impact events.

“The data told an even more interesting story for risk managers,” said Michael Leibrock, Managing Director and Chief Systemic Risk Officer at DTCC. “We found that 61 percent of risk managers believe that the probability of a high impact event has increased in the last six months—much higher than the 45 percent figure we saw from all respondents.”

The Systemic Risk Barometer was sent out to banks, brokerage firms, clearing firms, money managers and other stakeholders in the financial services industry. About 400 financial professionals responded to the survey sent out in September, including risk managers and others in legal, compliance, technology and operations. The survey also asked respondents to rank their top five risk concerns in order of importance.

Cyber Concerns Remain Strong

The other main finding is that cyber risk remains the chief concern among financial industry professionals—and has been for the last two surveys. Cyber risk weighed in as the top risk, with 70% of the respondents ranking it in their list of top five concerns, while 37% listed it as their No. 1 concern

“Given the number of cyber attacks in 2015 that garnered headlines, it comes as no surprise that cyber security remains a top concern throughout the industry,” said Stephen Scharf, Managing Director and Chief Security Officer at DTCC. “Comprehensive security programs will need to continually evolve as they devote more resources to an ever-changing systemic risk landscape.”

Related: DTCC Cyber Security White Paper

Top Risk Concerns

Cyber security and geopolitical risks remained the top two risks from Q1 to Q3, respectively. Half the respondents, 50%, placed geopolitical risk in their list of top five concerns. The impact of new regulations also held steady at number three, with 41% citing it as a top five concern.

Concerns around an economic slowdown outside the E.U./U.S. jumped from 22% in Q1 to 33% in Q3. As a result, this risk now ranks fourth, up from eleventh place six months ago.

“Right before the survey was sent out, fears of a China slowdown roiled markets in August,” explained DTCC’s Leibrock. “It makes sense that this issue made the list of top five concerns.”

In addition to the risks mentioned above, concerns about decreasing liquidity rose significantly, from 24% six months ago to 30% in the new survey.

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