First launched in 2013, the DTCC Systemic Risk Barometer Survey serves as an annual pulse check to monitor existing and emerging risks that may impact the safety, resiliency and stability of the global financial system. It is designed to help identify trends and foster industry-wide dialogue on potential threats to financial stability.
Related: Preparing for Extreme Risk & Tail Events
Top Five Risks
Cyber risk, infectious disease/pandemic (COVID-19) and geopolitical tensions continue to occupy the top three spots as the greatest threat to the global financial markets. Climate change and inflation both advanced significantly and grabbed the fourth and fifth spot in the rankings.
Between the Lines
Survey respondents cited key reasons behind the top rankings.
- Cyber: Increasing use of emerging technologies growing sophistication of cyberattacks and use of ransomware; and interconnectedness of financial system (one attack – multiple impacts).
- Infectious disease/pandemic (COVID-19): Market volatility; continues to be a drag on recovery and economic growth; and workplace and workforce disruptions.
- Geopolitical and trade tensions: Strained U.S./China relations; COVID disruptions to supply chains; high inflation and increasing public debt.
Surging Risks
U.S. Federal Reserve Monetary Policy and Fintech/Crypto assets were among the largest percentage advancers for the 2022 forecast. U.S. Federal Reserve Monetary Policy and FinTech/Crypto Assets were cited by 28% and 25% of respondents as a top 5 risk, an increase from 10% and 7% in last year’s survey, respectively.
Fading Risks
Economic slowdown concerns. U.S. and European economic slowdown as a risk to the broader economy dropped by 14% and 8%, respectively, from the 2021 forecast.
Building Intelligent Resilience
“Looking forward to 2022, risk managers face a set of challenges that is unprecedented both in terms of complexity and breadth. The interplay between macroeconomic risks, continued cyber threats, the rise of crypto assets and the impact of climate change - just to name a few areas - creates a dauntingly difficult terrain to navigate. In such an environment, continued vigilance and a cross-disciplinary approach to risk management are more important than ever.” – Andrew Gray, DTCC Managing Director, Group Chief Risk Officer.