In April, the International Securities Services Association (ISSA) published the Securities Services Risk Report 2025. The report's goal is to equip the Securities Services industry with the knowledge to identify potential risks and implement actions to mitigate these risks. The detailed report introduces Securities Services, outlining the asset lifecycle, participants, functions, and account structures, as well as twelve key risk categories.
This report followed up on ISSA’s Report on Inherent Risks within the Global Custody Chain from 2017. The updated report takes into consideration ongoing changes within the Securities Services industry, including the popularity of certain asset classes, the implementation of new technologies, fundamental operating model changes, evolving regulations and a shifting geopolitical landscape.
As part of the ISSA Securities Services Risks Working Group (WG), Noor Ibrahim, DTCC Director, Emerging and Systemic Risk, provided expertise on the systemic risk and geopolitical/geoeconomic risk sections.
Here’s a snapshot of what Ibrahim shared:
Systemic Risk
Systemic risk is a major disruption in financial services caused by problems in the financial system that can have severe negative effects on the overall economy. The key concepts of systemic risk outlined in the report include inbound and outbound systemic risk, contagion and amplification, as well as concentration and interconnectedness. There are interdependencies within Securities Services given the relationship between multiple Securities Services Providers and Financial Market Infrastructures (FMIs). Therefore, measures taken to mitigate the impact of these risks materializing should be focused on the risk of a breakdown of the financial system collectively, rather than a failure of one or more individual institutions.
Geopolitical Risk
Examples of geopolitical and geoeconomic issues include U.S.-China relations, the Russia/Ukraine war, tensions in the Middle East, and sustainability. Securities Services is inherently susceptible to geopolitical developments and the associated risks, including service disruptions, asset losses/seizures, sanctions, security failures, and reputational risks. The Covid-19 pandemic is cited as a major geoeconomic disruption that revealed vulnerabilities within the global financial and supply chain systems, evidenced by changes to fiscal and monetary policies at the time. The industry dealt with unprecedented trading volumes driven by heightened market volatility.
“Although markets rebounded relatively quickly, this event underscored the importance of risk mitigation measures that focus on access to geopolitical intelligence and the development of contingency plans and broad market risk assessments that go beyond legal risks,” Ibrahim stated. “Shifting ongoing monitoring and information sharing to be inclusive of geopolitical risks to proactively address emerging threats has never been more critical.”
DTCC’s involvement in ISSA extends beyond Ibrahim’s role in the WG. Brian Steele, President, Clearing and Securities Services at DTCC has been appointed to the Board of ISSA since July 2024.
"While not all risks can be mitigated and some are a necessary part of doing business", Steele said, "through DTCC’s continued collaboration with trusted partners such as ISSA and the broader securities services community, we’re able to illuminate the risks inherent in our market infrastructure and advance efforts to collectively identify and implement meaningful mitigation strategies."
As a next step, ISSA is planning to conduct a webinar in June to discuss the details of the report.
For more information, download the full Securities Services Risk Report 2025.