In 2022, cyber-risks outrank the COVID-19 pandemic and geopolitical tensions as the greatest potential threat to global financial markets.

Fifty-nine percent of the 216 risk managers queried for the “2022 Systemic Risk Barometer” survey conducted by the Depository Trust and Clearing Corporation (DTCC) cited cyber-risks in their top five threats, with 24% listing it as the greatest overall threat to the industry.

The increased sophistication of cyberattacks, as well as the industry’s ascending digital footprint, were cited as key reasons why cyber-risk took the top spot for 2022. Some respondents also expressed concern about maintaining effective cybersecurity practices in a remote work environment, the survey noted.

With technology comes new risks, DTCC Chief Security Officer Stephen Scharf told Bank Automation News, but automation is key to reducing that risk.

“As more information and processes are moved online, firms are also adopting new and emerging technologies that come with benefits as well as potential new risks,” Scharf said. “Automation can play a critical role in an organization’s approach to reducing cyber-risk.”

In part, he said, security programs focus on finding areas of concern and chaining together seemingly dissimilar events into a possible attack chain.

“Automation allows the processing and parsing of massive data elements in a way that manual review could not achieve at scale,” Scharf told BAN. “Manual review is critical at the end of a security response flow, but robust automation is the way for security programs to keep up with the exponentially increasing amount of data that firms generate.”

The DTCC conducts its survey of global risk managers annually. Last year, the pandemic ranked as the top threat to global markets; this year, the pandemic ranked second, ahead of geopolitical tensions at third.

Climate change and inflation stood out as areas of growing concern, said Adrien Vanderlinden, DTCC’s executive director of systemic risk. Thirty-eight percent of the 216 respondents named climate change as the fourth top concern for 2022, up from 20% last year. Inflation was also identified as a top-five risk by 34% of respondents, up 7% from last year.

“It’s clear that the physical threats posed by climate change — and whether natural disasters could cause business disruptions — are top of mind for risk managers, as is the question of how long the current rise in inflation might persist,” Vanderlinden told BAN. “These are evolving risks, and we continue to closely track these threats and other emerging areas of risk.”

Fintech and crypto assets, as well as the U.S. Federal Reserve monetary policy, advanced with the largest percentage increase in this year’s survey. Twenty-five percent of respondents cited fintech and crypto assets as a top-five risk, up from 7% in last year’s survey. The Fed monetary policy was cited by 28%, an increase of 10% over last year.

DTCC’s depository provides custody and asset servicing for securities issued from 170 countries and territories valued at $73.5 trillion.

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