Investment Operations

CYBER-RISK IS TOP OPERATIONAL RISK TO THE FINANCIAL INDUSTRY IN 2023

Corporate Actions Risk Management

According to an annual Systemic Risk Barometer Survey, Geopolitical Risks & Trade Tensions, Inflation and Cyber Risk are the most significant threats to the financial services ecosystem in the coming year.

Specifically, 68% of respondents to DTCC’s survey cited Geopolitical Risks & Trade Tensions as a top threat, up from 49% last year, as tensions around the world continue to impact global markets. 61% of survey respondents identified Inflation as a top threat, up from 34% last year, which represents the most significant jump across all risks. Respondents cited unknowns around how long inflationary pressures may last, as well as the impact of monetary policy and supply chains as key reasons behind their concerns. 47% of respondents ranked Cyber Risk as a top risk, a decrease from 59% last year, driven by the growing sophistication of threat actors, the proliferation of new technology adoption and an increasingly interconnected marketplace.

“The dramatic increase in concerns around Geopolitical Risks & Trade Tensions, Inflation and U.S. Economic Slowdown reinforce how quickly the threat landscape evolves and the importance of regularly monitoring the external environment to gain intelligence into potential shocks to market stability,” said Michael Leibrock, Chief Systemic Risk Officer at DTCC. “As a result, firms must continually review their risk management practices and procedures, conduct scenario planning exercises and ensure their operating structure is nimble to protect themselves and the broader industry.”

Nearly three years since the start of the pandemic, most respondents no longer consider COVID-19 a top threat to the industry, as case numbers decline, and vaccine availability continues to increase.

“The results of our latest survey provide important insights for DTCC and our clients to engage in industry-wide discussions on opportunities to share best practices and partner on ways to mitigate risk,” said Adrien Vanderlinden, DTCC Systemic Risk Executive.

DTCC conducts its Systemic Risk Barometer survey each year, with its last survey, the 2022 Risk Forecast, published in December 2021.