U.S. political uncertainty, particularly regarding the 2024 Presidential Election, has emerged as a key risk, with 51% of respondents highlighting it as a major concern. This reflects the potential impact of election outcomes on market conditions and the industry.
The Depository Trust & Clearing Corporation (DTCC) released its annual Systemic Risk Barometer Survey, highlighting the key risks facing the financial services industry in 2024. Geopolitical risks, inflation, U.S. political uncertainty due to the upcoming 2024 U.S. Presidential Election, and cyber risk are cited as the major threats.
Geopolitical risk, noted by 81% of respondents, remains the top concern for the second consecutive year. This reflects the ongoing global tensions and conflicts affecting markets. Although still significant, inflation concerns have slightly decreased, with 55% of respondents viewing it as a critical risk, down from 61% last year. There’s an expectation that inflation may decrease alongside reduced consumer demand and economic activity.
“Firms must regularly review and evolve their risk management”
Timothy Cuddihy, Managing Director and Group Chief Risk Officer at DTCC, noted the importance of adapting risk management practices in response to these evolving challenges. “The notable and sustained rise in concerns around Geopolitical Risks can be directly attributed to the uncertainty created by the uptick in international tensions and conflicts. At the same time, inflation remains a challenging issue that continues to impact the risk landscape. Firms must regularly review and evolve their risk management practices as the risk landscape shifts by conducting scenario planning exercises, implementing new, modernized recovery and resilience capabilities, and continuing to train their employees on the threat landscape.”
U.S. political uncertainty, particularly regarding the 2024 Presidential Election, has emerged as a key risk, with 51% of respondents highlighting it as a major concern. This reflects the potential impact of election outcomes on market conditions and the industry.
Cyber risk remains a consistent concern, with 50% of respondents acknowledging it as a significant threat. This risk has been consistently ranked among the top five threats since the survey’s inception in 2013.
Additionally, commercial real estate emerged as a growing risk area, driven by low occupancy rates and evolving post-Covid location strategies.
51% of respondents ranked 2024 U.S. Presidential Election as a top risk
Michael Leibrock, Managing Director and Chief Systemic Risk Officer at DTCC, said the Systemic Risk Barometer is crucial for providing insights and fostering industry-wide dialogue on risks that could impact financial stability. “Our annual Systemic Risk Barometer continues to provide important insight to our firm, our clients and the industry by identifying the top risks to the financial markets for the coming year. Importantly, it also helps to increase dialogue on the potential impact of these risks to financial stability.”
The DTCC Systemic Risk Barometer, launched in 2013, is an annual survey that monitors existing and emerging risks to the global financial system’s safety, resilience, and stability. The survey aims to identify trends and encourage discussions on potential financial stability threats.
In addition to concerns over Geopolitical Risk and Inflation, 51% of respondents ranked U.S. Political Uncertainty / 2024 U.S. Presidential Election as a top risk. This topic was the top advancer this year, increasing from 21% last year, as respondents consider the impact of upcoming elections on market conditions and the industry.
Cyber Risk closely followed at 50%, as respondents continue to express concerns around the threat landscape. Cyber Risk has been identified as a top-five risk to the industry every year since the survey’s inception in 2013. In addition to these areas, concerns around commercial real estate came through loudly in the responses, with many respondents noting low occupancy rates and post-Covid location strategies as key drivers of this growing area of risk.
