This report presents the results of the 2018 H2 survey, which was conducted by the Bank of England in the period between 17 September and 11 October 2018.
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 increased considerably. The percentage of respondents judging the probability of such an event to be high or very high increased from 24% to 67% since the 2018 H1 survey. Respondents’ perceived probability of such an event over the medium term was broadly unchanged.
- Confidence in the stability of the UK financial system over the next three years has fallen slightly. Respondents were less likely to judge themselves as being completely confident or very confident (24%, -5 percentage points since the 2018 H1 survey), and more likely to judge themselves fairly confident (70%, +4 percentage points).
Sources of risk to the UK financial system
- UK political risk was the risk to the UK financial system most cited by respondents (mentioned by 97% of respondents, +6 percentage points since 2018 H1). Around 80% of responses that cited UK political risk explicitly referred to the implications of Brexit. UK political risk also remains, by a considerable margin, the most frequently cited number one source of risk (mentioned by 74% of respondents).
- Cyber attack (66%, +4 percentage points) and geopolitical risk (62%, unchanged) were the second and third most cited risks respectively. The proportion of respondents that cited cyber attack increased for the fourth consecutive survey to a new high.
- A slightly larger proportion of respondents cited either the risk of a UK economic downturn (30%, +4 percentage points) or the risk of a global/overseas economic downturn (30%, +5 percentage points) than in the previous survey.
- There was a decrease in the proportion of respondents that cited the risks surrounding monetary or fiscal policy (20%, -12 percentage points).
Most challenging risks to manage as a firm
- UK political risk was cited as the most challenging risk to manage for the sixth consecutive survey. The proportion of respondents that cited this risk increased significantly (80%, +28 percentage points), and is now at its highest level since the survey began in 2008.
- The proportion of respondents that cited cyber attack increased for the second consecutive survey (55%, +4 percentage points) and it remained the second most cited risk in this category.
- There was a notable increase in the proportion of respondents (16%, +9 percentage points) that cited the risk of a global/overseas economic downturn among the most challenging risks to manage.