Blogs

Jo Geraghty

Director

Surveying systemic risk

Date added: 09th Jun 2014
Category: Culture of conduct/ethics

The Bank of England’s biannual survey of systemic risk has revealed that not only has the perceived risk of a high-impact event fallen to a new low, confidence in the banking system has also risen.  Interestingly, perhaps as a consequence of falling ‘major risk’ perceptions, there is less consensus now about both the top risk to the UK financial system and to the ‘risk most challenging to manage as a firm’.

Perhaps not unexpectedly, given the Ukraine situation, Geopolitical risk has risen rapidly through the ranks with only the risk of an economic downturn sitting higher in the ranks of key risks to the UK financial system.  Geopolitical risk has also been cited as the risk ‘most challenging to manage as a firm.’

Whilst a number of the risk factors are generally deemed to be outside of the control of respondents, operational risk is also fairly high on the agenda.  Sitting at number seven on the ‘key risks’ table and at number six on the ‘risks most challenging to manage,’ the perception of operational risk is in fact rising slightly.  Whether this is because many day to day operational events are dependent on external factors is not clear.  But when operational risk is seen as a threat, it may be time to take strong action in engaging employees and suppliers in a beliefs and behaviours programme which is aimed at reducing risk and strengthening the overall delivery mechanisms of the organisation.

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