This report presents the results of the 2017 H1 survey, which was conducted between 3 April and 21 April prior to the UK general election.
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 fallen notably. In contrast the perceived probability of such an event over the medium term remains elevated. 24% (-19 percentage points since the 2016 H2 survey) of respondents now consider the probability of a high-impact event as high or very high over the next twelve months; 62% (unchanged) between one and three years ahead.
- Confidence in the stability of the UK financial system over the next three years has increased. This was driven by a lower proportion of respondents judging themselves as not very confident (10%, -9 percentage points since the 2016 H2 survey). The proportion of respondents that judged themselves to be very confident or completely confident was unchanged (21%).
Sources of risk to the UK financial system
- The risk to the UK financial system most cited by respondents was UK political risk (mentioned by 81% of respondents, -5 percentage points since 2016 H2). This was also the most frequently cited number one source of risk (52%, -3 percentage points).
- Around 80% of all responses citing UK political risk explicitly referred to the implications of the referendum vote to leave the European Union.
- There was a material increase in the proportion of respondents that cited geopolitical risk (61%, +25 percentage points). This was driven by a combination of European political developments, the risk of more protectionist economic policies and possible threats from global conflicts.
- The proportion of respondents that cited cyber attack is now at its highest level since the survey began (51%, +17 percentage points).
- A slightly larger proportion of respondents cited the risk of a UK economic downturn than in the previous survey (29%, +4 percentage points). A smaller proportion of respondents cited the risk of an overseas or global economic downturn (26%, -11 percentage points).
Risks most challenging to manage as a firm
- UK political risk was most commonly cited as the risk most challenging to manage (62% of respondents, -2 percentage points since 2016 H2). There was a notable increase in the proportion of respondents citing cyber attack and geopolitical risk as the most challenging to manage (47%, +18 percentage points, and 47%, +27 percentage points, respectively).