The risk most cited as a threat to the UK’s financial system is a cyberattack, according to the Bank of England’s Systemic Risk Survey.
According to the bank, nearly three-quarters (74%) cited a cyberattack when asked to list the five risks most likely to have the greatest impact.
The survey also found that geopolitical risk and inflation risk were named joint second, at 72%. These top-three risks, said the Bank of England, are unchanged since the 2022 H1 survey. The fourth-rated risk, at 34%, was UK political risk. This was followed by 31% naming pandemic risk and 23% stating climate risk.
The Bank of England wrote: “Outside of the top six cited risks, other notable changes include respondents citing risk of an overseas/global economic downturn, which increased to 20%. This is in contrast to this risk category being at its lowest level (6%) since the survey began for respondents in the 2022 H1 survey. The perceived risk of a UK economic downturn also increased to 20% (+6 percentage points).”
However, the risk most cited as the number one risk was respondents was inflation (38%), with cyberattacks and geopolitical risk named each by 17% as the top risk.
Respondents were also asked to indicate which three of the five risks they identified would be the most challenging to manage if they were to materialise. Inflation risk was cited by 61% of respondents, followed by cyberattack (56%), geopolitical risk (48%), UK political risk (14%), and climate risk (13%) and UK economic downturn (13%).
Worryingly, the Bank of England said that the perceived probability of a high-impact happening in the short-term has increased significantly.
It wrote: “The percentage of respondents judging that probability to be high or very high doubled from 31% to 62% since the 2022 H1 survey, compared to its peak of 73% in the 2019 H2 survey. Correspondingly, the percentage of respondents judging the probability in the short term to be low or very low decreased from 23% to 3%.”
It added: “Eighty-three per cent of respondents believed that the probability of a high-impact event in the short term had increased over the past six months, a significant increase from 39% in the 2022 H1 survey. Fifteen per cent of respondents believed that the probability remained unchanged and 2% judged the probability to have decreased.”
According to the Bank of England, the Systemic Risk Survey has been undertaken biannually since 2009 and was published for the first time in November 2011.
