Cyber risks, and geopolitical concerns such as the result of the US presidential election and UK’s decision to quit the European Union, are among key risks facing the global financial system, according to a survey by The Depository Trust & Clearing Corporation (DTCC).
Respondents also cited other geopolitical risks such as instability in the Middle East, the impact of the ongoing refugee crisis across Europe, and the influence of Russia and China on global relations and the world economy as key concerns.
Twenty two percent of respondents termed cyber risk as the single biggest threat to the industry, while 56% labelled the risk as one of the top five concerns.
At the same time, respondents were also expressed concern about central bank monetary policy, including the divergence of policies between the US Federal Reserve and global central banks, and the impact on growth.
The study further revealed continuing investment in development of systemic risk capabilities, with nearly 66% of respondents citing that they have increased the amount of resources for identifying, monitoring, and mitigating systemic risk over the last 12 months.
Also, 61% of respondents said that their firm’s ability to identify, assess and manage existing and emerging systemic risks remains in progress.
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DTCC managing director and chief systemic risk officer Michael Leibrock said: “While cyber threats and geopolitical concerns are distinct risk categories, they can also converge and materialize in combination with each other.
“Several respondents rightfully point to the growing incidence and sophistication of state-sponsored cyber attacks as a particularly worrisome trend that is emerging at the intersection of both areas of risk.”