Cybersecurity, geopolitical risks and Brexit were found to be the top three risks with possible systemic consequences for 2019, according to a new survey by DTCC.
DTCC (the Depository Trust & Clearing Corporation) has released the results of its latest annual risk survey. 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.
Cyber risk remained the top risk overall this year, ranked in the top 5 by 69% of respondents (compared to 78% last year). It was cited as the single biggest threat for 2019 by more than one-third (37%) of respondents.
Geopolitical risks and trade tensions ranked second, cited as a top 5 risk by 55% of respondents. “As tension continues to materialise, there is an increasing possibility of spikes, fluctuations and/or dislocations in markets that react to these events,” explained DTCC managing director and head of global public policy Mark Wetjen.
Brexit related risks were cited by nearly half (49%) of respondents, up from 38% last year, as March 2019 – the date when the UK is set to leave the EU – rapidly approaches and a significant number of questions and variables remain unresolved.
“These include uncertainty about the nature of the exit agreement and subsequent trade agreements, uncertainty as to whether there will be a transition period or not and consequently uncertainty about the impact that Brexit will have on both the UK and the EU economies,” said DTCC managing director of government relations or Europe & Asia, Andrew Douglas. “We see firms actioning their plans to deal with Brexit without a clear understanding of what a post-Brexit Europe will actually look like.”
Excessive global debt, included as a risk category for the first time, came in as the fourth biggest risk, cited as a top 5 risk for 2019 by 28% of respondents.
“The issue of excessive global debt […] may be reaching an inflection point as central banks across the globe continue monetary policy tightening campaigns, suspend asset purchase programs and initiate/accelerate efforts to unwind and liquidate their balance sheet holdings,” said DTCC managing director, chief systemic risk officer and head of counterparty credit risk Michael Leibrock. “The Fed’s monetary policy tightening campaign may have a pronounced effect on countries with debt that is benchmarked against or denominated in US dollars.”
The impact of new regulations was cited as the fifth biggest risk, included in the top 5 by 26% of respondents for 2019, compared to 45% last year.