Geopolitical and Cyber Risks Remain Top Threats to the Financial Services Sector in 2025

New York/London/Hong Kong/Singapore/Sydney, December 4, 2024 ‒ The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, today issued its annual Systemic Risk Barometer Survey results, identifying Geopolitical Risks, Cyber Risk, U.S. Political Uncertainty and U.S. Presidential Election Outcome, Inflation and U.S. Economic Slowdown as the top five threats to the financial services industry in the upcoming year. In addition, 55% of respondents indicated they believe there is high or very high chance that a high-impact systemic event will affect the global financial services industry in 2025.

• #1 Risk: 84% of respondents indicated that Geopolitical Risk was of concern, making it the top risk next year. Respondents cited concerns that a significant geopolitical event could develop or advance and substantially impact financial markets. This is the third consecutive year that Geopolitical Risk has been ranked as the number one risk to the industry. It has been listed in the top 5 risks since the Survey’s inception in 2013, as global tensions and conflicts continue to impact markets and performance.
• #2 Risk: 69% of respondents identified Cyber Risk as a top threat, making it the second most significant risk to the industry. Cyber Risk was the top advancer across all risk categories this year, up from 50% in last year’s Survey, with some respondents highlighting that concerns in this area are compounded by the geopolitical environment, the rise in the use of emerging technology and the evolution of cyber-attacks.
• #3 Risk: 48% of respondents ranked U.S. Political Uncertainty and U.S. Presidential Election Outcome as a top risk, making it the third highest risk to the industry. Respondents highlighted the impact that elections can have on market conditions and volatility as a result of potential political and economic uncertainty. This survey was conducted prior to the U.S. election.

"Given the evolving geopolitical and cyber security landscape and the potential for these risks to amplify each other, it was not surprising to see these risks at the top of this year’s Survey,” said Timothy Cuddihy, Managing Director and Group Chief Risk Officer at DTCC. "Firms should regularly update their risk management strategies by conducting scenario planning, reviewing key dependencies, assessing recovery planning, and training employees to understand the risk impacts of these threats."

Additionally, 32% of respondents identified Inflation as a top 5 risk, making it the #4 risk for the coming year. Finally, 31% of respondents indicated U.S. Economic Slowdown concerns as a top risk, making it the #5 risk in 2025. Many respondents noted the potential impacts of geopolitical instability, climate change and cyber-attacks on economies.

Added Cuddihy, "Our annual Systemic Risk Barometer offers valuable perspectives on the significant risks facing our industry. Crucially, it fosters discussion about how these risks could affect firms and financial stability, as well as how we can continue to evolve our preparations and ensure resilience.”

In addition to the top five risks, notably, FinTech Risk represented the second highest advancer in risk categories, behind Cyber Risk. When asked what was driving concerns around FinTech, 69% of respondents cited that technologies like AI, Machine Learning and Robotic Processing Automation could pose the highest potential threats in the coming year as more firms adopt emerging technologies to support business objectives.

DTCC conducts its Systemic Risk Barometer survey each year, with its last survey, the 2024 Risk Forecast, published in December 2023.

Notes to the Editor

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, resilience 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.

###

ABOUT DTCC

With over 50 years of experience, DTCC is the premier post-trade market infrastructure for the global financial services industry. From 19 locations around the world, DTCC, through its subsidiaries, automates, centralizes, and standardizes the processing of financial transactions, mitigating risk, increasing transparency, enhancing performance and driving efficiency for thousands of broker/dealers, custodian banks and asset managers. Industry owned and governed, the firm innovates purposefully, simplifying the complexities of clearing, settlement, asset servicing, transaction processing, trade reporting and data services across asset classes, bringing enhanced resilience and soundness to existing financial markets while advancing the digital asset ecosystem. In 2025, DTCC’s subsidiaries processed securities transactions valued at U.S. $4.7 quadrillion and its depository subsidiary provided custody and asset servicing for securities issues from over 150 countries and territories valued at U.S. $114 trillion. DTCC’s Global Trade Repository service, through locally registered, licensed, or approved trade repositories, processes more than 25 billion messages annually. To learn more, please visit us at www.dtcc.com or connect with us on LinkedIn, X, YouTube, Facebook and Instagram.