Overview

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 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.

Additional background information on the survey is available in the 2009 Q3 Quarterly Bulletin article Bank of England Systemic Risk Survey.

This report presents the results of the 2024 H2 survey, which was conducted between 23 July and 12 August.

55 firms participated in the 2024 H2 survey, representing a 68% response rate.

Confidence in the UK financial system

Respondents were asked about the level of confidence they have in the stability of the UK financial system over the next three years.

Chart 1 represents the results in one weighted measure, while the figures below and in Table A1 refer to simple percentages.

Survey participants reported a higher level of confidence in the UK financial system than in 2024 H1.

• 40% of respondents judge themselves as completely or very confident (+11 percentage points relative to the 2024 H1 survey).
• 56% of respondents judge themselves as being fairly confident in the UK financial system (-9 percentage points).
• 4% of respondents judge themselves as being not very confident (-2 percentage points).

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]}

Charts 2 and 3 represent results in one weighted measure, while the figures below and in Table A1 refer to simple percentages.

Respondents judge that the likelihood of a high-impact event is lower than judged in the previous survey over the short term and medium term.

Over the short term (0–12 months):

• No respondents consider the likelihood of a high-impact event to be very high (unchanged since the 2024 H1 survey).
• 17% of all respondents consider the likelihood of a high-impact event to be high (-8 percentage points).
• 46% of all respondents consider the likelihood of a high-impact event to be medium (-4 percentage points).
• 37% of all respondents consider the likelihood of a high-impact event to be low (35%, +12 percentage points) or very low (2%, -1 percentage point).

Over the medium term (1–3 years):

• No respondents judge that the probability of a high-impact event over the medium term is very high (-8 percentage points relative to the 2024 H1 survey).
• 2% of respondents judge that the probability of a high-impact event over the medium term is very low (+2 percentage points), and 13% judge that it is low (-2 percentage points).
• 43% of respondents judge that the probability of a high-impact event over the medium term is high (+5 percentage points).

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. To give an overview of the results, answers, which were provided in free-text format, have been grouped into the 27 categories shown in Table A2.^{footnote [3]} Below is a list of the risks that were most frequently cited by the respondents in the 2024 H2 survey as one of their top five risks (Chart 4):

1. Geopolitical risk (cited by 93% of respondents, +8 percentage points since the 2024 H1 survey).

2. Cyber attack (80%, +10 percentage points).

3. Risks associated with a UK economic downturn (45%, +1 percentage point).

4. Risks associated with an overseas/global economic downturn (33%, +19 percentage points).

5. Climate risk (29%, -7 percentage points).

The risks most commonly cited by market participants as their ‘number one’ source of risk to the UK financial system (Chart 5) were:

1. Geopolitical risk (42%, +1 percentage points).

2. Cyber attack (31%, +10 percentage points).

3=. Risks associated with a UK economic downturn (5%, -7 percentage points).

3=. Risks associated with an overseas/global economic downturn (5%, +3 percentage points).

5=. Inflation risk (4%, -1 percentage points).

5=. IT Risk (4%, +4 percentage points).

Geopolitical risk and cyber attack remain the most frequently cited risks among participants, with the proportion of those citing geopolitical risk increasing further to its highest level recorded in the survey.

The share of survey respondents citing risks associated with an overseas/global downturn increased sharply, to its highest level since 2019 H2, while the shares citing climate risks and inflation risks have fallen further. For the first time in the survey, respondents cited risks associated with IT as their ‘number one’ risk.

• The two most frequently cited risks – geopolitical risk and cyber attack – were also the most frequently cited in the previous survey. Respondents reported a range of concerns within these two categories, including ongoing conflicts, global elections, and the potential for cyber attacks to impact the whole financial system including banking system infrastructure.
• The next most cited risks continued to be those associated with a UK economic downturn, at 45% (+1 percentage point since the 2024 H1 survey), though fewer respondents now cite it as their number one risk (5%, -7 percentage points).
• The proportion of respondents citing climate risk has fallen in recent surveys, and is at 29% (-7 percentage points), the lowest since 2022 H2. Meanwhile the share of respondents citing risks associated with an overseas/global economic downturn jumped to 33% (+19 percentage points), its highest since 2019 H2.
• The share of respondents citing inflation risk in (a) their top five risks, or (b) as their number one risk continued to decrease to 24% (-17 percentage points) and 4% (-1 percentage points) respectively.
• There was an uptick in the share of respondents citing risks associated with IT, for example external vendor issues and disruption of IT infrastructure (11%, +9 percentage points), and for the first time in the survey, some cited it as their ‘number one’ risk (4%).

Most challenging risks to manage as a firm

Respondents were asked to rank which of the five risks they identified would be the most challenging to manage, should they materialise.

Geopolitical risk and cyber attack are still considered to be most challenging to manage for a majority of firms.

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

1=. Geopolitical risk (71% of respondents, +1 percentage points since the 2024 H1 survey).

1=. Cyber attack (71%, +12 percentage points).

3. Risks associated with an overseas/global economic downturn (22%, +12 percentage points).

4. Risks associated with a UK economic downturn (16%, -2 percentage points).

5. Climate risk (15%, -1 percentage points).

6. IT risk (11%, +11 percentage points).

Key risks most likely to materialise

Respondents were asked to indicate which three of the five risks they thought would be the most probable to materialise.^{footnote [4]}

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

1. Geopolitical risk (75% of respondents, + 8 percentage points since the 2024 H1 survey).

2. Cyber attack (60%, +20 percentage points).

3. Risks associated with a UK economic downturn (29%, -8 percentage points).

4. Risks associated with an overseas/global economic downturn (22%, +10 percentage points).

• Geopolitical risk and cyber attack remain the most likely to materialise according to respondents, with a significant increase in those citing a cyber attack since 2024 H1.
• The likelihood of risks associated with an overseas/global economic downturn has also grown since the 2024 H1 survey.
• Concerns around UK political risk have decreased since the previous survey to 4%, with a 13 percentage point decline in respondents citing this as one of the most likely risks to materialise since 2024 H1.