This report presents the results of the 2016 H1 survey which was conducted between 11 April and 29 April.
Probability of a high-impact event and confidence in the UK financial system
- The perceived probability of a high-impact event in the UK financial system over the short term has risen considerably. The perceived probability of such an event over the medium term has increased slightly. 56% (+46 percentage points since the 2015 H2 survey) of respondents now consider the probability of a high-impact event as high or very high over the next year; 37% (+6 percentage points) between one and three years ahead.
- Confidence in the stability of the UK financial system has fallen since the 2015 H2 survey. Respondents are less likely to judge themselves as very or completely confident (14%, -15 percentage points since the 2015 H2 survey) and more likely as not very confident (10%, +4 percentage points).
Sources of risk to the UK financial system
- The two risks to the UK financial system most cited by respondents were those of an economic downturn (mentioned by 73% of respondents, +1 percentage point since 2015 H2) and UK political risk, which increased significantly (+46 percentage points to 72%). UK political risk was also identified as the number one source of risk (+61 percentage points to 65%). In the history of this survey only one other risk has ever been identified by a larger proportion of respondents as their number one source of risk.
- Around half of respondents citing an economic downturn specifically referenced a slowdown in global economic growth, rather than a UK-specific slowdown.
- Almost all respondents that mentioned UK political risk explicitly referenced the possibility of the United Kingdom leaving the European Union.
- The perceived risk of a cyber attack increased, albeit marginally, for the third consecutive survey to a new survey high (+2 percentage points to 48%). The proportion of respondents citing risk of financial market disruption/dislocation fell slightly (-7 percentage points to 37%). Perceived risks surrounding the low interest rate environment rose (+13 percentage points to 34%). Respondents perceived geopolitical risks to have fallen noticeably (-14 percentage points to 32%). The risks around regulation and taxes have increased (+9 percentage points to 28%), driven by concerns over regulation rather than taxation.
Risks most challenging to manage as a firm
- UK political risk was most commonly cited as the risk most challenging to manage. The percentage of respondents mentioning this risk increased by 39 percentage points (14% to 53%). Only sovereign risk, in the period between 2011 and 2013, has ever been perceived as a more challenging risk to manage since this survey began in July 2008.