DTCC survey identifies top risks for 2023

12 December 2022

The Depository Trust & Clearing Corporation (DTCC) says its annual Systemic Risk Barometer Survey has identified geopolitical and trade tensions, inflation and cyber risks as the “most significant threats to the financial services ecosystem” in the coming year.

The results flagged “geopolitical risks and trade tensions” as the top threat with 68% of respondents highlighting it as a “risk to the broader economy”, a 19% uptick from last year’s survey.

Inflation was also identified as a major new risk with 61% including it in their “top five risks”, a notable increase from 34% last year. Cyber risk was the third ranked threat, dropping to 47% from last year’s 59%.

“The concerns that rank at the top of this year’s survey – geopolitical tensions, cybersecurity threats, inflation and other macroeconomic risks – all have the potential to cause significant market turmoil in the year ahead,” DTCC MD and Group Chief Risk Officer Timothy Cuddihy said.

“This highlights the need for central counterparties to assess multiple and interconnected risks to protect the stability and integrity of global financial markets.”

The DTCC noted dwindling optimism for economic growth in 2023, with only 27% of North American and 29% of non-North American respondents agreeing that there will be positive economic growth next year.

“The current macroeconomic environment is extremely challenging, as inflation in the US and abroad is reaching levels that haven’t been observed in decades, while concerns about a global economic slowdown are rising rapidly,” DTCC Chief Systemic Risk Officer Michael Leibrock said.

The findings showed conflicting opinions on the immediate risk and threat of climate change between North American and rest of the world respondents.

Only 26% of North American respondents agreed that there is an “imminent or short-term risk,” regarding their area, presented by climate change to financial sectors, compared to 44% from non-North American respondents.