The Bank of England publishes its latest survey on systemic risks (a biannual exercise). The survey is not the Bank’s view but the result of feedback received from market participants treasurers and management executives.
A most interesting result is the nature of the most quoted risk categories:
- Cyber-attack (cited by 74% of respondents).
- Geopolitical risk (59%).
- Pandemic risk (57%).
- Operational risk – this includes risks relating to climate change (48%).
- UK political risk (40%).
- Risk of financial market disruption (33%) and Inflation risk (33%).
The risks most frequently cited as respondents’ number one risk were:
- Pandemic risk (38% of respondents viewed it as their number one risk).
- Cyber-attack (19%).
- Inflation risk (12%).
- UK political risk (10%).
Unsurprisingly, the Pandemic risk are at the forefront of most institutions’ preoccupations.
But the items which follow are providing an indication of the shift which has been occurring recently:
a) Cybersecurity has become a very hot and risky topic
b) Geopolitical risks are increasing (around Taiwan for instance)
c) Operational risks, of which Climate / Biodiversity / Pollution are key constituents, are getting more and more prominent in those rankings
The survey link: https://www.bankofengland.co.uk/systemic-risk-survey/2021/2021-h2