A new survey on risk
trends impacting the financial services industry reveals that 61% of risk
managers believe the probability of a high-impact event in the global financial
system has increased during the past six months, with the threat of a cyber
attack a key driver.
According to the
Depository Trust & Clearing Corporation’s (DTCC) latest Systemic Risk
Barometer Survey, which was completed by approximately 400 DTCC clients and international
participants across the global financial services industry in September and
October 2015, cyber risk remains the number one concern globally, as it was in
the previous survey in Q1 2015, with 70% of all respondents citing it as a top
In North America,
concerns were even higher with 77% identifying cyber security as a top five
concern. DTCC cites on respondent as noting, “Cyber risks appear to be
multiplying while controls to address these risks may not be able to keep up
with the continually escalating threats,” and adds this concern over the
frequency and ability to manage attacks was a common theme among
“When it comes to
fighting cyber risk specifically, we’re seeing a lot of market participants
collaborating to a greater degree than in the past,” says Mark Clancy, CEO of
Soltra, a joint venture between DTCC and the Financial Services Information
Sharing and Analysis Centre. “More and more firms are aware of how information
sharing can help prevent and minimise incidents while making it more expensive
for hackers to be successful. This is one area where resources are being
Away from cyber
security, 45% of all respondents across functional departments believe the
probability of a high-impact event in the global financial system has increased
during the past six months, an increase of 16 percentage points since the last
survey was conducted earlier this year.
When asked which risks
contributed to this concern, in addition to the aforementioned cyber threat, respondents
say that geopolitical risk and the impact of new regulations add most to fears
of a high-impact event.
Geopolitical risk and
the impact of new regulations are identified as the second and third highest
risks globally, cited by 50% and 41% of all respondents, respectively.
DTCC says European-based
respondents tend to rank geopolitical risk highest, while respondents located
in the APAC region or working for APAC firms express particular concerns over
an economic slowdown outside of the EU/US. Many respondents also highlight
concerns related to market liquidity. “The volatility will be exacerbated by
the lack of liquidity in the markets caused by over-regulation,” was the
observation of one respondent.
In response to these
threats, 72% of all respondents indicate their firms have increased the amount
of resources dedicated to identifying, monitoring and mitigating systemic risks
over the past year – continuing a trend identified in previous surveys.
The survey also
reveals that more firms are becoming aware of interconnectedness risk and how
the failure of one firm can ripple through the global economy.
“Interconnectedness is only as good as the weakest link. Failure has the
risk of becoming a house of cards,” notes one respondent.
Colin_lambert@profit-loss.com Twitter @lamboPnL