SUMMARY DTCC’s most recent Systemic Risk Barometer survey was completed in 2014 Q3 by DTCC clients and a broad range of global stakeholders from the financial services industry.
Overall, 37% of respondents said that the probability of a high-impact event in the global financial system has increased during the past six months – up 16 points since the last survey was conducted in March 2014. A record 84% of respondents identified cyber risk as one of their top five concerns – an increase of 25 points since March 2014. Furthermore, 33% ranked cyber threats as the number one systemic risk to the broader economy, up from 24% in March 2014. In addition to the findings on cyber risks, the survey’s other key results include: 64% of respondents cite the impact of new regulations as a top five concern and 62% identified geopolitical risk as a top five concern. In line with these results, 76% of all respondents indicated they have increased the amount of resources dedicated to identifying, monitoring and mitigating systemic risks over the past year. 67% of respondents characterized their firm’s ability to identify, assess and manage emerging risks as “Developing” and 29% “Mature.”
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SURVEY RESULTS CHANGE IN PROBABILITY OF A HIGH-IMPACT EVENT PROBABLITY OF A HIGH IMPACT EVENT 37% of respondents indicated that the probability of a high-impact event in the global financial system has increased during the past six months – up from 21% in March 2014.
2014 Q3
Decr
Incre
2014 Q3
Unch
37%
21%
12%
25%
2014 Q1 53%
51% Increased
Unchanged
Decreased
NUMBER ONE RISK IDENTIFIED Cyber risk, geopolitical risk and the impact of new regulations were the most widely cited top concerns. NUMBER 1 RISK IDENTIFIED A combined 70% of respondents indicated one of these risks as their number one concern.
2014 Q3
33% Cyber Risk
18%
19%
Impact of New Regulations
Geopolitical Risk
30% Other Risks
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Cyber Security
Geopolitical
Impact of New Regulation
Other Risks
TOP 5 RISKS IDENTIFIED Respondents were asked to identify the top 5 systemic risks to the broader economy. The results show some significant shifts compared to March 2014, as reflected below.
RISKS TO BROADER ECONOMY RISK TO BROADER ECONOMY
Cyber Risk Impact of New Regulations
59%
Geopolitical Risk 43% 39% 32%
Disruption/Failure of Key Market Participant
45%
31%
U.S. Recession
55%
European Recession
27% 26%
Liquidity Risk
41% 22%
Significant Business Continuity Event
30%
19%
Major Compliance/Governance Event
29% 15%
Interconnectedness Risk Search for Yield
20%
14% 14% 17%
CCP as Single Point of Concentration
13% 11%
High Frequency Trading Housing Market
8%
Shortage of High-Quality Collateral
8% 15% 6%
Pro-cyclical Collateral Demands Fire Sale in Repo Market
Shadow Banking
64%
62%
Sudden Dislocation in Financial Markets
Dark Pools
84%
59%
9%
5% 4% 2%
7%
2014 Q3 2014 Q1
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SYSTEMIC RISK RESOURCES 76% of all respondents indicated they have increased the amount of resources dedicated to identifying, monitoring and Change in systemic Aggregate Resource Commitment to from Systemic Risk Activities mitigating risks over the past year (up 70% in March 2014).
2014 Q3
23% 30% 1%
2014 Q1 70% 76%
Increased
Unchanged
Decreased
SYSTEMIC RISK CAPABILITIES Over two-thirds of respondents characterized their firm’s capability to address systemic risks as “developing.” This assessment is relatively similar to the results of the March 2014 survey.
Systemic Risk Capabilities
Firms' Capability to Identify, Monitor and Mitigate Current and Emerging Systemic Risks
