Systemic Risk Survey Results - 2011 H2

The Systemic Risk Survey is conducted on a biannual basis, to quantify and track market participants’ views of risks to, and their confidence in, the stability of the UK financial system.
Published on 22 November 2011
This report presents the results of the 2011 H2 survey which was conducted between 20 September and 21 October.

Probability of a high-impact event and confidence in the UK financial system

  • The perceived probability of a future high-impact event in the UK financial system increased sharply in 2011 H2, compared with 2011 H1, and was reported to be at the highest level since the survey began in July 2008.
  • Looking over a short-term horizon, 54% of respondents found the probability of a high-impact event to be high or very high in the 2011 H2 survey, 43% found it to be medium and only 3% found it to be low or very low. Over a medium-term horizon, the corresponding percentages were 60%, 34% and 6%.
  • Respondents’ confidence in the stability of the UK financial system as a whole over the next three years fell to its lowest level since 2009 H2, with 28% not very confident and 57% only fairly confident.

Sources of risk to the UK financial system

  • The five risks reported most frequently by respondents to have the greatest impact on the UK financial system if they were to materialise were: sovereign risk (cited by 76% of respondents), the risk of an economic downturn (76%), funding risk (57%), risks around regulation/taxes (38%) and the risk of financial institution failure/distress (26%).
  • Four of the top five risks were unchanged from the 2011 H1 survey. Only the risk of financial institution failure/distress was new in the top five, replacing the risks of property price falls and financial market disruption/dislocation which shared the fifth place in the previous survey. Compared with 2011 H1, more respondents cited funding risk (+15 percentage points) and sovereign risk (+10 percentage points) while fewer cited household/corporate credit risk (-15 percentage points), the risk of property price falls (-15 percentage points), inflation risk (-13 percentage points) and the risk of financial market disruption/dislocation (-12 percentage points).
  • The risk cited most commonly as the number one risk was sovereign risk. This was cited as the top risk by 62% of respondents — the highest concentration around a number one risk since the survey started in July 2008.

Risks most challenging to manage as a firm

  • The top five risks respondents would find most challenging to manage as a firm were the same as the top five key risks listed above, but with sovereign risk more dominant: sovereign risk was cited by 68% of respondents; the risk of an economic downturn by 38%; funding risk by 35%; risks around regulation/taxes by 31%; and the risk of financial institution failure/distress by 21%.

PDF Survey results

PDFQuestionnaire

Excel Data tables

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