The Depository Trust and Clearing Corporation published its annual risk survey which monitors existing and emerging risks that may impact the global financial sector.
The top five threats identified by the industry were cyber security, geopolitical risk, Brexit, global debt and new regulations.
Cyber security remained the number one threat with 37 per cent citing it as the most significant risk and 69 per cent ranking it in the top five.
Just below cyber security was geopolitical risk, which included emerging markets and China, with 55 per cent of respondents including in their top five risks.
Brexit was the largest single issue identified by investors with almost half including it as a top five risk, an 11 per cent increase on last year’s survey.
Excessive global debt continued its rise in importance with 28 per cent putting it in their top five. Rounding out the top five was impact of new regulations with 26 per cent putting it in their top five.
Despite making it into the top five, the impact of new regulations was seen as significantly less of a risk going into 2019 than it was 12 months ago where it was in the top three most significant risks.
DTCC’s chief systemic risk officer Michael Leibrock said the survey made it clear that pockets of weakness were appearing throughout worldwide markets.
“The broad perspective of these survey results shows that while economic indicators continue to appear strong, pockets of weakness are starting to appear across numerous components of the financial system as geographic flash points continue to materialize and intensify,” he said.
Mr Leibrock said that firms needed to continue to watch markets and for risks, particularly given how connected the global systems were.
“It is critical that firms continue to remain vigilant to anticipate and prepare for not only these emerging risks, but the potential cascading effects that may arise from an increasingly interconnected financial system,” he said.
DTCC’s managing director Andrew Gray said this year’s survey was a chance to reflect on the ten year anniversary of the 2008 crisis but warned that the next crisis would be unlike the last one.
“History has taught us that the next crisis is unlikely to look exactly like the previous crisis, could be fundamentally different than what is presently being envisioned and could potentially be triggered by new risks that didn’t exist a decade ago or don’t presently exist today.
“DTCC’s ongoing commitment to thought leadership and outreach campaigns reinforce the importance of continued information sharing and transparency as well as the criticality of staying vigilant and prepared,” he said.
