The outcome of tomorrow’s US election and Britain’s exit from the EU are among the top risks facing the global financial system, according to a new survey by post-trade giant DTCC. 

The firm's latest systemic risk barometer shows rising concern over the unpredictable nature of world events and sudden escalation that could cause global market volatility and instability.

Instability in the Middle East, the impact of the ongoing refugee crisis across Europe and the influence of Russia and China on global relations and the world economy are also cited as major concerns.

Cyber risk remains the top danger overall, with 22% of respondents citing it as the single biggest threat to the industry and 56% rating it a top five concern, consistent with survey results from DTCC’s last poll conducted 6 months ago. 

“While cyber threats and geopolitical concerns are distinct risk categories, they can also converge and materialise in combination with each other,” said Michael Leibrock, managing director and chief systemic risk officer at DTCC.

“Several respondents rightfully point to the growing incidence and sophistication of state-sponsored cyber attacks as a particularly worrisome trend that is emerging at the intersection of both areas of risk.” 

Concerns rising over central bank policies

The risks of economic slowdowns within the US, Asia, and Europe appear to have eased over the past 6 months, with results returning to levels seen last year. 

However, respondents increasingly cited concerns about central bank monetary policy, including the divergence of policies between the US Federal Reserve and global central banks, as well as the corresponding impact on growth.

Investment in systemic risk capabilities continues

About 66% of those surveyed said they have increased the amount of resources dedicated to identifying, monitoring, and mitigating systemic risk over the last 12 months, a trend consistent with prior surveys. 

Additionally, 61% indicated their firm’s ability to identify, assess and manage both current and emerging systemic risks remains in progress,” 

“The results have shown that the financial system, broadly speaking, continues to be increasingly interconnected, with new risks emerging and affecting the overall level and nature of systemic risk. Leibrock added.