Systemic Risk Survey Results - 2021 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 08 October 2021

Overview

The Systemic Risk Survey is a biannual survey that asks market participants about perceived risks to, and their confidence in, the stability of the UK financial system. The survey is generally completed by executives responsible for firms’ risk management or treasury functions. The results presented are based on responses to the survey and do not necessarily reflect the Bank of England’s views on risks to the UK financial system. Participants include UK banks and building societies, large foreign banks, asset managers, hedge funds, insurers, pension funds, large non-financial companies and central counterparties. Summary statistics are calculated by giving equal weight to each survey response.

This is the first survey since it was paused after the 2019 H2 edition in light of the Covid-19 (Covid) pandemic. The next survey will be in six months. Additional background information on the survey is available in the 2009 Q3 Quarterly Bulletin article ‘Bank of England Systemic Risk Survey’.

Survey summary 2021 H2

In 2021 H2 the key observations are: confidence in the stability of the UK financial system over the next three years has increased over the past six months; the perceived probabilities of a high-impact event occurring over both the short and medium term has decreased over the same period; and cyber-attack risks were the most cited risk to the UK financial system and the most challenging for firms to manage. Most participants also cited risks from the current Covid pandemic.

The Systemic Risk Survey

The Systemic Risk Survey is conducted by the Bank of England 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.

This report presents the results of the 2021 H2 survey, which was conducted between 16 August and 7 September.

Confidence in the stability of the UK financial system

  • Confidence in the stability of the UK financial system over the next three years has increased relative to recent surveys. Respondents were more likely to judge themselves as being completely confident or very confident (50%, +17 percentage points since the 2019 H2 survey), and less likely to judge themselves as fairly confident (45%, -15 percentage points).

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

  • The perceived probabilities of a high-impact event in the UK financial system over both the short and medium term have decreased. The percentage of respondents judging the probability of such an event over the short term to be high or very high decreased significantly (from 73% to 22% since the 2019 H2 survey). The percentage judging the probability to be high or very high over the medium term also decreased from 64% to 52%.

Sources of risk to the UK financial system

  • Cyber-attack is the most cited risk to the UK financial system (mentioned by 74% of respondents, an increase of 13 percentage points when compared to 2019 H2). Pandemic risk is the most frequently cited number one source of risk (mentioned by 38% of respondents).
  • Geopolitical risk (59%) and pandemic risk (57%) were the second and third most cited sources of risk to the financial system, respectively.
  • The number of respondents that cited UK political risk fell significantly to 40% and the operational risk category increased from 20% to 48% (this category included risks related to climate change).

Most challenging risks to manage as a firm

  • Cyber-attack was cited the most often as the risk that would be most challenging to manage if it were to materialise (58% of respondents, +10 percentage points compared to 2019 H2).
  • Pandemic-related risk was cited as the second most challenging risk to manage, with 40% of respondents mentioning this category, and geopolitical risk was third (32% of respondents).

Most probable risks to materialise

  • In the first time this question has been included in this survey, cyber-attack, pandemic risk, geopolitical risk and operational risk (including risks related to climate change) were cited as the most probable risks to materialise.

Introduction

The Bank of England’s financial stability objective is to protect and enhance the stability of the financial system of the United Kingdom. The Systemic Risk Survey contributes to this objective by quantifying and tracking, on a biannual basis, market participants’ views of risks to, and their confidence in, the stability of the UK financial system.footnote [1]

The survey is typically completed by executives responsible for risk management and treasury functions at institutions including: UK banks and building societies; large foreign banks; asset managers; hedge funds; insurers; pension funds; large non-financial companies; and central counterparties. Fifty-eight participants took part in the 2021 H2 survey between 16 August and 7 September, representing a 61% response rate among those surveyed.

Confidence in the UK financial system

Respondents were asked to assess the level of confidence they have in the stability of the UK financial system as a whole over the next three years.

Confidence in the stability of the UK financial system over the next three years has increased relative to the 2019 H2 survey. Respondents were more likely to judge themselves as being completely confident or very confident (50%, +17 percentage points since the 2019 H2 survey), and less likely to judge themselves fairly confident (45%, -15 percentage points) (Table A1). Chart 1 weights these responses into one measure.

Seventy-two per cent of respondents judged their confidence in the UK financial system as unchanged over the past six months, and 22% judged their confidence to have increased (an increase of 18 percentage points when compared to 2019 H2).

Chart 1: Confidence in the stability of the UK financial system as a whole over the next three years (a)

Chart shows a weighted bar chart depicting respondent’s confidence in the UK financial system over the next three years. Overall net confidence has increased in this survey with 50% of respondents judging themselves as being completely or very confident.

Footnotes

  • Sources: Bank of England Systemic Risk Surveys and Bank calculations.
  • (a) Respondents were asked how much confidence they had in the stability of the UK financial system as a whole over the next three years. The net percentage balance is calculated by weighting responses as follows: complete confidence (1), very confident (0.5), fairly confident (0), not very confident (-0.5) and no confidence (-1). Bars show the contribution of each component to the net percentage balance.

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

Respondents were asked for their view on the probability of a high-impact event in the UK financial system in the short and medium term.footnote [2] In the most recent survey, the perceived probabilities of a high-impact event in the UK financial system over both the short and medium term decreased over the past six months.

The percentage of respondents judging the probability of a high impact event over the short term to be high or very high decreased from 73% to 22% since the 2019 H2 survey. The percentage of respondents judging the probability in the short term to be low or very low increased significantly from 6% to 29%. This is the highest this value has been since the 2017 H2 survey. The top panel of Chart 2 weights these probabilities into one measure.

Over the past six months 36% of respondents believed that the probability of a high-impact event has decreased and 57% believed that the probability is unchanged. Only 7% of respondents judged the probability to have increased, which is the lowest level since 2014 H1. The lower panel of Chart 2 weights these probabilities into one measure.

Chart 2: Probability of a high-impact event in the UK financial system over the short term (a) (b)

The top panel of Chart 2 shows a weighted bar chart depicting the respondents judgment of the probability of a high-impact event in the UK financial system over the short term. The net percentage balance has decreased showing that the respondents think the probability is significantly lower.

How respondents think this probability has changed over the past six months (a) (b)

The bottom panel of Chart 2 is a weighted bar chart that shows how respondents think this probability has changed over the past six months. Only 7% of respondents think that the probability has increased and the overall net probability has fallen significantly.

Footnotes

  • Sources: Bank of England Systemic Risk Surveys and Bank calculations.
  • (a) Respondents were asked the probability of a high-impact event in the UK financial system in the short term. And also how they thought this probability had changed over the past six months. From the 2009 H2 survey onwards, short term was defined as 0–12 months.
  • (b) The net percentage balance in the upper chart is calculated by weighting responses as follows: very high (1), high (0.5), medium (0), low (-0.5) and very low (-1). The net percentage balance in the lower chart is calculated as the percentage of respondents that perceived an increase, less the percentage that perceived a decrease. Bars show the contribution of each component to the net percentage balance.

The percentage of respondents judging the probability of a high-impact event to be high or very high over the medium term decreased from 63% to 52%, while the proportion of respondents judging the probability to be low or very low increased from 5% to 9%. The top panel of Chart 3 weights these probabilities into one measure.

There was a decrease of 20 percentage points in the number of participants that believed the probability of a high-impact event had increased (lower panel of Chart 3).

Chart 3: Probability of a high-impact event in the UK financial system over the medium term (a) (b)

The top panel of Chart 3 shows a weighted bar chart depicting the respondents judgment of the probability of a high-impact event in the UK financial system over the medium term. The net percentage balance shows a slight decrease.

How respondents think this probability has changed over the past six months (a) (b)

The bottom panel of Chart 3 is a weighted bar chart that shows how respondents think this probability has changed over the past six months. There was a decrease of 20 percentage points in the number of participants that believed the probability of a high-impact event had increased.

Footnotes

  • Sources: Bank of England Systemic Risk Surveys and Bank calculations.
  • (a) Respondents were asked the probability of a high-impact event in the UK financial system in the medium term. And also how they thought this probability had changed over the past six months. From the 2009 H2 survey onwards, medium term was defined as 1–3 years.
  • (b) See footnote (b) of Chart 2.

Sources of risk to the UK financial system

Respondents were asked to list the five risks they thought would have the greatest impact on the UK financial system if they were to materialise. Answers were provided in free-text format, but have been grouped into the 23 categories shown in Table A2 in the data appendix to give an overview of the results.footnote [3] The risks most frequently cited in the 2021 H2 survey were (Chart 4):

  1. Cyber-attack (cited by 74% of respondents).
  2. Geopolitical risk (59%).
  3. Pandemic risk (57%).
  4. Operational risk – this includes risks relating to climate change (48%).
  5. UK political risk (40%).
  6. Risk of financial market disruption (33%) and Inflation risk (33%).

Chart 4: Sources of risk to the UK financial system – mentioned by respondents (a) (b)

Chart 4 is a line chart that shows a time series of the main sources of risk cited by the respondents. The risk of cyber-attack has been cited the most this survey, with geopolitical risk and pandemic risk in second and third, respectively. The UK political risk category saw a decrease in the percentage of respondents citing it from 96% to 40%.

Footnotes

  • Sources: Bank of England Systemic Risk Surveys and Bank calculations.
  • (a) Respondents were asked to list the five risks they thought would have the greatest impact on the UK financial system if they were to materialise. Answers were in a free-text format and were grouped into categories after the questionnaires had been submitted; only one category was selected for each answer. Chart figures are the percentages of respondents citing a given risk at least once, among respondents citing at least one key risk. The chart shows the top five categories; see the data appendix for additional categories.
  • (b) Risks cited in previous surveys have been regrouped into the categories used to describe the latest data.

The risk of a cyber-attack became the most cited risk for the first time since the survey started. Risks surrounding pandemics (a new category) was cited by 57% of respondents, and geopolitical risks remained in the top three most cited risks for the seventh survey in a row.

There was a steep increase in the percentage of respondents citing operational risk. This category includes risks related to climate change, which was cited by the majority of responses in this category. The UK political risk category saw a decrease in the percentage of respondents citing it from 96% to 40%.

Other significant changes include: the proportion of respondents who mentioned risks related to higher inflation, which increased by 30 percentage points since the last survey; a decrease of 24 percentage points in the risk of an overseas/global economic downturn; and a decrease in the proportion of respondents citing the risk of a UK economic downturn to 12%.

The risks most frequently cited as respondents’ number one risk (Chart 5) were:

  1. Pandemic risk (38% of respondents viewed it as their number one risk).
  2. Cyber-attack (19%).
  3. Inflation risk (12%).
  4. UK political risk (10%).

Chart 5: ‘Number one’ sources of risk to the UK financial system (a) (b)

Chart 5 is a line chart that shows a time series of the number one sources of risk to the UK financial system. 38 per cent of respondents viewed pandemic risk as their number one risk and 19 per cent viewed cyber-attack as their number one risk.

Footnotes

  • Sources: Bank of England Systemic Risk Surveys and Bank calculations.
  • (a) Respondents were asked to list the five risks they thought would have the greatest impact on the UK financial system if they were to materialise, in order of potential impact (ie greatest impact first). Answers were in a free-text format and were grouped into categories after the questionnaires had been submitted; only one category was selected for each answer. Chart figures are the percentages of respondents citing a given risk as their number one key risk, among respondents citing at least one key risk. The chart shows the top four categories; see the data appendix for additional categories.
  • (b) Risks cited in previous surveys have been regrouped into the categories used to describe the latest data.

Most challenging risks to manage as a firm

Respondents were asked to indicate which three of the five risks they identified would be the most challenging to manage if they were to materialise.

The most cited responses are shown below (Chart 6):

  1. Cyber-attack (58% of respondents).
  2. Pandemic risk (40%).
  3. Geopolitical risk (32%).
  4. Operational risk (28%).
  5. UK political risk (25%).
  6. Inflation risk (23%).
  7. Risks around regulation/taxes (16%).

Chart 6: Risks most challenging to manage as a firm (a) (b)

Chart 6 is a line chart that shows a time series of the risks most challenging to manage as a firm. The categories of operational risk, inflation risk, cyber-attack and risks around regulation/taxes saw the most significant increases. In contrast, UK political risk, risk of an overseas/global economic downturn and risk of a UK economic downturn saw the biggest decreases.

Footnotes

  • Sources: Bank of England Systemic Risk Surveys and Bank calculations.
  • (a) After respondents had listed the five risks they believed would have the greatest impact on the UK financial system if they were to materialise, they were asked which three of these risks they would find most challenging to manage as a firm. Answers were in a free-text format and were grouped into categories after the questionnaires had been submitted; only one category was selected for each answer. Chart figures are the percentages of respondents citing a given risk at least once, among respondents citing at least one key risk. The chart shows the top five categories only; see the data appendix for additional categories.
  • (b) Risks cited in previous surveys have been regrouped into the categories used to describe the latest data.

The categories of operational risk, inflation risk, cyber-attack and risks around regulation/taxes saw the most significant increases (+24 percentage points, +20 percentage points, +10 percentage points and +8 percentage points, respectively). The new category, pandemic risk, was second, with 40% of respondents citing it as most challenging to manage. In contrast, UK political risk, risk of an overseas/global economic downturn and risk of a UK economic downturn saw the biggest decreases (-51 percentage points, -17 percentage points and -7 percentage points, respectively).

Most probable risks to materialise

Respondents were asked to indicate which three of the five risks they thought would be the most probable to materialise.

The most cited responses are shown below (Chart 7):

  1. Cyber-attack (58% of respondents).
  2. Pandemic risk (46%).
  3. Geopolitical risk (28%).
  4. Operational risk (28%).
  5. UK political risk (26%).
  6. Inflation risk (23%).
  7. Risk of financial market disruption/dislocation (19%).

Chart 7: Risks most likely to materialise – as mentioned by respondents (a) (b)

Chart 7 shows a tree diagram of the risks cited as most likely to materialise. Cyber-attack was mentioned by 58% of respondents as likely to materialise, 46% of respondents cited pandemic risk and 28% cited geopolitical risk as likely to materialise.

Footnotes

  • (a) After respondents had listed the five risks they believed would have the greatest impact on the UK financial system if they were to materialise, they were asked which three of these risks they thought were most likely to materialise. Answers were in a free-text format and were grouped into categories after the questionnaires had been submitted; only one category was selected for each answer. Chart figures are the percentages of respondents citing a given risk at least once, among respondents citing at least one key risk.
  • (b) Risks cited in previous surveys have been regrouped into the categories used to describe the latest data.

Data appendix

A full set of results in Excel and the survey questionnaire are available at the end of this page.

  • Aggregate risks to the UK financial system (a) (b)

    2016 H1

    2016 H2

    2017 H1

    2017 H2

    2018 H1

    2018 H2

    2019 H1

    2019 H2

    2021 H2

    Probability of a high-impact event in the UK financial system in the short term (c)

    Very high

    15

    5

    7

    2

    2

    13

    6

    15

    3

    High

    41

    37

    17

    23

    22

    54

    46

    57

    19

    Medium

    31

    40

    50

    44

    51

    29

    35

    21

    48

    Low

    10

    13

    24

    29

    24

    3

    12

    6

    24

    Very low

    3

    4

    2

    2

    1

    0

    1

    0

    5

    Probability of a high-impact event in the UK financial system in the medium term (c)

    Very high

    6

    23

    18

    13

    7

    6

    9

    6

    9

    High

    31

    39

    45

    43

    51

    54

    42

    57

    43

    Medium

    49

    31

    33

    38

    37

    31

    38

    32

    40

    Low

    14

    6

    4

    7

    6

    9

    10

    4

    9

    Very low

    0

    0

    1

    0

    0

    0

    1

    1

    0

    Change in the probability over the past six months of a high-impact event in the UK financial system in the short term (d)

    Increased

    79

    55

    43

    36

    26

    73

    44

    68

    7

    Unchanged

    21

    36

    49

    60

    55

    27

    51

    31

    57

    Decreased

    0

    9

    9

    3

    18

    0

    5

    1

    36

    Change in the probability over the past six months of a high-impact event in the UK financial system in the medium term (d)

    Increased

    48

    69

    52

    55

    31

    38

    26

    43

    22

    Unchanged

    51

    30

    44

    42

    63

    61

    73

    56

    66

    Decreased

    1

    1

    4

    3

    6

    1

    1

    1

    12

    Confidence in the stability of the UK financial system as a whole over the next three years (e)

    Complete confidence

    1

    2

    0

    1

    0

    1

    1

    0

    0

    Very confident

    13

    19

    21

    25

    29

    22

    30

    33

    50

    Fairly confident

    76

    60

    69

    64

    66

    70

    63

    60

    45

    Not very confident

    10

    19

    10

    10

    6

    7

    6

    7

    5

    No confidence

    0

    0

    0

    0

    0

    0

    0

    0

    0

    Change in confidence over the past six months (f)

    Increased

    1

    5

    11

    3

    7

    1

    2

    4

    22

    Unchanged

    51

    46

    61

    69

    78

    58

    77

    73

    72

    Decreased

    48

    49

    28

    28

    15

    40

    21

    24

    5

    Footnotes

    • Sources: Bank of England Systemic Risk Surveys and Bank calculations.
    • (a) Entries are percentages of respondents and may not sum to 100% due to rounding.
    • (b) The survey has been undertaken biannually since 2009, following a pilot survey conducted in July 2008.
    • (c) Respondents were asked what the probability of a high-impact event in the UK financial system was in their view, for both the short and medium term. Since the 2009 H2 survey, short and medium term have been specifically identified as 0–12 months and 1–3 years respectively. These terms were not explicitly defined in earlier surveys.
    • (d) Respondents were asked how the probability had changed over the past six months for the short and medium term. Since the 2009 H2 survey, short and medium term have been specifically identified as 0–12 months and 1–3 years respectively. These terms were not explicitly defined in earlier surveys.
    • (e) Respondents were asked how much confidence they had in the stability of the UK financial system as a whole over the next three years.
    • (f) Respondents were asked how their confidence had changed over the past six months. The question was asked from 2010 H1 onwards.
  • Sources of risk to the UK financial system (a) (b) (c)

    2016 H1

    2016 H2

    2017 H1

    2017 H2

    2018 H1

    2018 H2

    2019 H1

    2019 H2

    2021 H2

    Sources of risk to the UK financial system (d)

    Cyber-attack

    48

    34

    51

    57

    62

    66

    60

    61

    74

    Geopolitical risk

    32

    36

    61

    61

    62

    62

    62

    58

    59

    Pandemic risk (e)

    0

    0

    0

    0

    0

    0

    0

    0

    57

    Operational risk

    18

    16

    12

    10

    8

    3

    7

    20

    48

    UK political risk

    72

    86

    81

    91

    91

    97

    93

    96

    40

    Risk of financial market disruption/dislocation

    37

    30

    16

    18

    16

    18

    27

    31

    33

    Inflation risk

    0

    9

    6

    5

    6

    6

    6

    2

    33

    Risks around regulation/taxes

    28

    29

    29

    29

    23

    16

    19

    17

    21

    Other

    4

    15

    17

    5

    7

    9

    7

    4

    21

    Risk of an overseas/global economic downturn

    59

    37

    26

    18

    25

    30

    38

    38

    14

    Risk of a UK economic downturn

    31

    24

    29

    34

    26

    30

    23

    23

    12

    Risk of property price falls

    25

    29

    22

    23

    20

    19

    14

    11

    12

    Risks surrounding monetary and fiscal policy

    13

    17

    18

    27

    32

    20

    14

    10

    9

    Risk of financial institution failure/distress

    7

    28

    12

    11

    11

    10

    12

    14

    7

    Household/corporate credit risk

    7

    1

    6

    15

    17

    10

    6

    5

    7

    Risk of tightening in credit conditions

    6

    2

    2

    2

    2

    2

    5

    0

    5

    Risk surrounding the low interest rate environment (f)

    34

    47

    14

    6

    2

    0

    2

    12

    3

    Risk of infrastructure disruption

    10

    2

    2

    5

    5

    7

    5

    4

    2

    Risk of loss of confidence in the authorities

    0

    1

    1

    0

    3

    3

    4

    4

    2

    Funding risk

    8

    2

    1

    0

    0

    1

    5

    4

    0

    Risk of lack of confidence in ratings, valuations and disclosure

    4

    0

    1

    1

    1

    0

    0

    1

    0

    Sovereign risk

    21

    13

    21

    14

    8

    15

    11

    0

    0

    Risks around public anger against, or distrust of, financial institutions

    0

    1

    0

    0

    0

    0

    0

    0

    0

    Number one source of risk to the UK financial system (g)

    Pandemic risk (e)

    0

    0

    0

    0

    0

    0

    0

    0

    38

    Cyber-attack

    6

    2

    7

    7

    14

    8

    14

    6

    19

    Inflation risk

    0

    0

    3

    0

    0

    0

    1

    0

    12

    UK political risk

    65

    55

    52

    67

    53

    74

    69

    79

    10

    Operational risk

    3

    2

    3

    0

    1

    1

    1

    2

    3

    Risk of financial market disruption/dislocation

    1

    5

    3

    2

    2

    3

    2

    0

    3

    Risks around regulation/taxes

    1

    1

    1

    2

    5

    3

    0

    0

    3

    Geopolitical risk

    1

    1

    16

    7

    11

    3

    5

    5

    2

    Risk of an overseas/global economic downturn

    8

    7

    2

    1

    5

    2

    2

    5

    2

    Risks surrounding monetary and fiscal policy

    0

    3

    1

    2

    0

    1

    1

    2

    2

    Risk of a UK economic downturn

    3

    4

    2

    3

    2

    2

    1

    1

    2

    Risk of financial institution failure/distress

    0

    7

    1

    0

    1

    1

    0

    0

    2

    Risk of tightening in credit conditions

    0

    0

    1

    2

    0

    0

    0

    0

    2

    Household/corporate credit risk

    0

    0

    0

    2

    2

    0

    0

    0

    0

    Other

    0

    1

    0

    1

    1

    0

    0

    0

    0

    Risk surrounding the low interest rate environment (f)

    6

    5

    0

    1

    1

    0

    0

    0

    0

    Sovereign risk

    1

    2

    6

    1

    0

    0

    0

    0

    0

    Risk of property price falls

    1

    1

    2

    1

    1

    0

    0

    0

    0

    Risk of lack of confidence in ratings, valuations and disclosure

    1

    0

    0

    0

    0

    0

    0

    0

    0

    Risk of loss of confidence in the authorities

    0

    0

    0

    0

    0

    0

    0

    0

    0

    Funding risk

    0

    0

    0

    0

    0

    0

    0

    0

    0

    Risk of infrastructure disruption

    1

    1

    0

    0

    0

    0

    2

    0

    0

    Risks around public anger against, or distrust of, financial institutions

    0

    0

    0

    0

    0

    0

    0

    0

    0

    Number of respondents citing at least one source of risk

    71

    94

    101

    96

    87

    89

    81

    84

    58

    Footnotes

    • Sources: Bank of England Systemic Risk Surveys and Bank calculations.
    • (a) Respondents were asked which five risks they believed would have the greatest impact on the UK financial system if they were to materialise, in order of potential impact (ie greatest impact first). Answers were provided in a free format and were subsequently coded into the above categories; only one category was selected for each answer. Risks cited in previous surveys have been regrouped into the categories used to describe the latest data.
    • (b) The survey has been undertaken biannually since 2009, following a pilot survey conducted in July 2008.
    • (c) Figures are expressed as nearest whole integer, so may appear inconsistent with figures shown in the text of the survey.
    • (d) Percentages of respondents citing each risk at least once in their top five, among those citing at least one risk.
    • (e) Pandemic risk is a new category introduced in 2021 H2 due to the Covid pandemic.
    • (f) The definition of this risk includes risks associated with a snapback in low rates to more normal levels, as well as risks directly associated with low rates.
    • (g) Percentages of respondents citing each risk as their number one risk (ie the risk with the greatest potential impact), among those citing at least one source of risk.
  • Risks most challenging to manage as a firm (a) (b) (c)

     

    2016 H1

    2016 H2

    2017 H1

    2017 H2

    2018 H1

    2018 H2

    2019 H1

    2019 H2

    2021 H2

    Cyber-attack

    38

    28

    47

    45

    51

    55

    52

    48

    58

    Pandemic risk (d)

    0

    0

    0

    0

    0

    0

    0

    0

    40

    Geopolitical risk

    12

    14

    40

    36

    37

    39

    35

    32

    32

    Operational risk

    13

    8

    10

    4

    8

    1

    3

    4

    28

    UK political risk

    53

    64

    62

    70

    52

    80

    82

    75

    25

    Inflation risk

    0

    5

    3

    0

    5

    1

    1

    3

    23

    Risks around regulation/taxes

    23

    20

    15

    15

    15

    7

    11

    8

    16

    Other

    0

    2

    4

    5

    3

    4

    6

    1

    16

    Risk of financial market disruption/dislocation

    28

    18

    8

    10

    12

    9

    10

    12

    12

    Risk of a UK economic downturn

    17

    11

    11

    14

    12

    10

    6

    14

    7

    Household/corporate credit risk

    2

    0

    1

    2

    5

    4

    0

    3

    7

    Risk of financial institution failure/distress

    0

    19

    4

    7

    4

    4

    8

    8

    5

    Risk of an overseas/global economic downturn

    30

    20

    14

    6

    7

    16

    14

    21

    4

    Risks surrounding monetary and fiscal policy

    7

    9

    7

    11

    15

    6

    1

    3

    4

    Risk of property price falls

    7

    7

    4

    12

    5

    7

    6

    1

    4

    Risk of tightening in credit conditions

    0

    0

    1

    0

    1

    2

    1

    0

    4

    Risk of infrastructure disruption

    8

    2

    0

    4

    4

    5

    4

    4

    2

    Risk surrounding the low interest rate environment (e)

    15

    22

    4

    2

    0

    0

    0

    5

    0

    Risk of loss of confidence in the authorities

    0

    1

    1

    0

    0

    0

    1

    1

    0

    Risk of lack of confidence in ratings, valuations and disclosure

    3

    0

    1

    1

    1

    0

    0

    1

    0

    Sovereign risk

    13

    5

    11

    5

    3

    5

    8

    0

    0

    Funding risk

    2

    1

    1

    0

    0

    1

    3

    1

    0

    Risks around public anger against, or distrust of, financial institutions

    0

    0

    0

    0

    0

    0

    0

    0

    0

    Cited at least one key risk, but did not cite any risk as challenging to manage (%)

    15

    6

    9

    13

    16

    8

    12

    13

    0

    Number of respondents citing at least one source of risk

    71

    94

    101

    96

    87

    89

    81

    84

    58

    Footnotes

    • Sources: Bank of England Systemic Risk Surveys and Bank calculations.
    • (a) After respondents had listed the five risks they believed would have the greatest impact on the UK financial system if they were to materialise, they were asked which three of these risks they would find most challenging to manage as a firm. Answers were provided in a free format and were subsequently coded into the above categories; only one category was selected for each answer. Risks cited in previous surveys have been regrouped into the categories used to describe the latest data. Table entries are the percentages of respondents citing each risk at least once in this second question, among those citing at least one source of risk.
    • (b) The survey has been undertaken biannually since 2009, following a pilot survey conducted in July 2008.
    • (c) Figures are expressed as nearest whole integer, so may appear inconsistent with figures shown in the text of the survey.
    • (d) Pandemic risk is a new category introduced in 2021 H2 due to the Covid pandemic.
    • (e) The definition of this risk includes risks associated with a snapback in low rates to more normal levels, as well as risks directly associated with low rates.
  1. The Systemic Risk Survey has been undertaken biannually since 2009, following a pilot survey conducted in July 2008. It was published for the first time in November 2011. The survey results complement other sources of information used by the Bank to identify system-wide risks.

  2. Since the 2009 H2 survey, short and medium term have been specifically identified as 0–12 months and 1–3 years respectively. These terms were not explicitly defined in earlier surveys.

  3. These summary categories are adjusted over time in order to better capture current risks cited. Risks cited in previous surveys have been regrouped into the new categories to ensure comparability across survey rounds.

This page was last updated 12 October 2021

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