The Bank of England (BoE) published the results of the systemic risk survey for the second half of 2021. This usually biannual survey was paused amid pandemic and this is the first survey since then. The survey participants included UK banks and building societies, large foreign banks, asset managers, hedge funds, insurers, pension funds, large non-financial companies, and central counterparties. The survey revealed that confidence in the stability of the UK financial system has increased over the past six months and cyber-attacks as the most cited risk to the financial system and also the most challenging for firms to manage.
The survey revealed that the perceived probabilities of a high-impact event in the UK financial system over the short and medium term have decreased. The percentage of respondents judging the probability of such an event over the short term to be high or very high decreased significantly while the percentage of those judging the probability to be high or very high over the medium term decreased from 64% to 52%. In the category of the most challenging risks to manage as a firm, cyber-attack was the most cited response (58% of respondents), followed by pandemic risk (40%), geopolitical risk (32%), operational risk including risks related to climate change (28%), UK political risk (25%), inflation risk (23%), and risks around regulation/taxes (16%). Among the sources of risk to the UK financial system and the most probable risks to materialize categories, cyber-attack was again the most cited risk.
Related Link: Survey Results
Keywords: Europe, UK, Banking, Systemic Risk, COVID-19, Systemic Risk Survey, Cyber Risk, Climate Change Risk, Operational Risk, Pandemic Risk, BoE
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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