A vast majority (70%) of financial firms who participated in a recent survey by the Depository Trust & Clearing Corporation (DTCC) say they have increased spending on systemic risk mitigation, despite an apparent ease in fears of a systemic risk event happening in the next 12 months.
The DTCC’s Systemic Risk Barometer, a newly branded survey now in its second year, assesses and measures the financial industry’s sentiment on significant and emerging trends that impact the safety, resiliency and continued sustainability of the global financial system. The barometer analyzed the information provided by 218 respondents – up from 80 in 2013 – comprising DTCC clients, including broker/dealers, banks, service bureaus, mutual fund companies, hedge funds and insurance companies.
This year, the survey was further extended to regulators, academics and members of research organizations globally.
Estimated budgets for systemic risk mitigation range from less than $1 million, for 36% of respondents; to $1 million-$5 million for 35%; to more than $5 million for 29%. No individuals report that their firms had decreased spending.
Respondents once again rank the impact of new regulations and cyber security as the first and second most relevant to their firms. The third, fourth and fifth most relevant risks are: a significant business continuity event; disruption or failure of a key market participant; and a major compliance or governance event. These did not change materially from the 2013 survey, says the DTCC.
Just 9% of this year’s survey respondents, compared to about 37% in 2013, say they believe the occurrence of a high-impact market event in the next year to be “Likely.”
In addition, 63% of respondents classify their firm’s ability to identify, assess and manage emerging risks as “Developing” and 33% rank their firms as “Mature.”
Commenting on the increase in spending on systemic risk mitigation over the last 12 months, Michael Leibrock, DTCC chief systemic risk officer, says: “This trend might indicate that systemic risk protection is becoming firmly embedded in corporate culture and standard business practices.”
Spending on Systemic Risk Mitigation Increases, Survey Finds
A vast majority (70%) of financial firms who participated in a recent survey by the Depository Trust & Clearing Corporation (DTCC) say they have increased spending on systemic risk mitigation, despite an apparent ease in fears of a systemic risk event happening in the next 12 months.
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