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 2022 H2 survey, which was conducted between 27 July and 26 August.
Sixty-five participants took part in the 2022 H2 survey, representing a 64% response rate among those surveyed.
Key results from 2022 H2 survey
- The perceived probability of a high-impact event in the UK financial system occurring over both the short term and the medium term has increased significantly.
- But confidence in the stability of the UK financial system over the next three years remains high.
- Cyber attack remains the most cited risk to the UK financial system, followed closely by inflation and geopolitical risks.
- Pandemic risk was cited by far fewer respondents than in H1, but remains among the most frequently cited perceived risks to the financial system.
- Inflation risk is considered the most challenging risk to manage for firms, followed closely by cyber attack.
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 UK financial system remains high. Fifty-five per cent of respondents judged themselves as being fairly confident (+4 percentage points), but respondents were a little less likely to judge themselves as being completely or very confident (42%, -4 percentage points). (see Table A1 in the data appendix). Chart 1 weights these responses into one measure.
Seventy-one per cent of respondents judged their confidence in the UK financial system as unchanged over the past six months, and none judged their confidence to have increased, while 29% responded that their confidence had decreased in the past six months.
Chart 1: Confidence in the stability of the UK financial system as a whole over the next three years (a)
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]
The perceived probability of a high-impact event over the short term (0–12 months) has increased significantly. The percentage of respondents judging that probability to be high or very high doubled from 31% to 62% since the 2022 H1 survey, compared to its peak of 73% in the 2019 H2 survey. Correspondingly, the percentage of respondents judging the probability in the short term to be low or very low decreased from 23% to 3%. The top panel of Chart 2 weights these probabilities into one measure.
Eighty-three per cent of respondents believed that the probability of a high-impact event in the short term had increased over the past six months, a significant increase from 39% in the 2022 H1 survey. Fifteen per cent of respondents believed that the probability remained unchanged and 2% judged the probability to have decreased. The bottom 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)
How respondents think this probability has changed over the past six months (a) (b)
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.
Over the medium term (1–3 years), 72% of respondents judged the probability of a high-impact event to be high or very high (+26 percentage points compared to the 2022 H1 survey) marking a series high. A majority (55%) of respondents judged the probability of a high-impact event over the medium term to be at a high level. The top panel of Chart 3 weights these probabilities into one measure.
Sixty-nine per cent of respondents believed the probability of a high-impact event had increased over the medium term.
Chart 3: Probability of a high-impact event in the UK financial system over the medium term (a) (b)
How respondents think this probability has changed over the past six months (a) (b)
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 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 a free-text format, but have been grouped into the 25 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 2022 H2 survey were (Chart 4):
1. Cyber attack (cited by 74% of respondents).
2=. Geopolitical risk (72%) and inflation risk (72%).
4. UK political risk (34%).
5. Pandemic risk (31%).
6. Climate risk (23%).
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 six 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 remains the most cited. Geopolitical risk was cited by 72% of respondents and has consistently appeared among the top six most frequently cited risks since the 2014 H1 survey. Inflation risks were also cited by 72% of respondents. These three most frequently cited risks are unchanged from the 2022 H1 survey.
Outside of the top six cited risks, other notable changes include respondents citing risk of an overseas/global economic downturn, which increased to 20%. This is in contrast to this risk category being at its lowest level (6%) since the survey began for respondents in the 2022 H1 survey. The perceived risk of a UK economic downturn also increased to 20% (+6 percentage points).
The risks most frequently cited as respondents’ number one risk (Chart 5) were:
1. Inflation risk (38% of respondents viewed it as their number one risk).
2=. Cyber attack (17%) and geopolitical risk (17%).
4. Risk of a UK economic downturn (8%).
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 ‘number one’ sources of risk that have been cited by at least 20% of respondents in a given survey; see the data appendix for more detail.
- (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. Inflation risk (61% of respondents).
2. Cyber attack (56%).
3. Geopolitical risk (48%).
4. UK political risk (14%).
5=. Climate risk (13%) and risk of a UK economic downturn (13%).
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 six 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.
Inflation risk is now considered the most challenging risk to manage by a majority of respondents. At 61%, the proportion citing this as one of the most challenging risks has increased sharply (+15 percentage points) since the previous survey. Cyber attack was the second most frequently cited at 56%, a decrease of 9 percentage points. Geopolitical risk saw an increase of 8 percentage points since the 2022 H1 survey.
Notably, pandemic risk has fallen out of the top six most challenging risks for surveyed firms, with a 20 percentage point decrease in the proportion of respondents selecting it since the 2022 H1 survey. In contrast, UK political risk enters the top six in this survey, with 14% of respondents selecting this as one of their most challenging risks to manage (+4 percentage points since the 2022 H1 survey).
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 responses are shown below (Chart 7):
1. Inflation risk (63% of respondents, +5 percentage points from 2022 H1).
2. Geopolitical risk (54%, +18).
3. Cyber attack (37%, -18).
4. Risk of a UK economic downturn (20%, +10).
5=. UK political risk (18%, +10) and risk of an overseas economic downturn (18%, +15).
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 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.
- (c) Risk of financial institution failure, funding risk, risk of property price falls, risks around regulations/taxes, sovereign risk and pandemic risk were each selected by fewer than 2% of respondents, and have been combined into the ‘Other’ category in this chart.
Inflation risk, geopolitical risk and cyber attack remain the three risks considered most likely to materialise by respondents. Risk of a UK economic downturn, UK political risk, and risk of tightening credit conditions were all cited as risks most likely to materialise by 10% more respondents than in the 2022 H1 survey, while the proportion citing risk of an overseas economic downturn increased by 15 percentage points.
Meanwhile, the perceived likelihood of pandemic risk has fallen significantly, being cited by just 2% of respondents compared to 36% in the 2022 H1 survey.
Data appendix
Aggregate risks to the UK financial system (a) (b)
2017 H2
2018 H1
2018 H2
2019 H1
2019 H2
2021 H2
2022 H1
2022 H2
Probability of a high-impact event in the UK financial system in the short term (c)
Very high
2
2
13
6
15
3
1
14
High
23
22
54
46
57
19
30
48
Medium
44
51
29
35
21
48
46
35
Low
29
24
3
12
6
24
21
3
Very low
2
1
0
1
0
5
1
0
Probability of a high-impact event in the UK financial system in the medium term (c)
Very high
13
7
6
9
6
9
9
17
High
43
51
54
42
57
43
37
55
Medium
38
37
31
38
32
40
53
26
Low
7
6
9
10
4
9
1
2
Very low
0
0
0
1
1
0
0
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
36
26
73
44
68
7
39
83
Unchanged
60
55
27
51
31
57
51
15
Decreased
3
18
0
5
1
36
10
2
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
55
31
38
26
43
22
33
69
Unchanged
42
63
61
73
56
66
61
29
Decreased
3
6
1
1
1
12
6
2
Confidence in the stability of the UK financial system as a whole over the next three years (e)
Complete confidence
1
0
1
1
0
0
1
0
Very confident
25
29
22
30
33
50
44
42
Fairly confident
64
66
70
63
60
45
51
55
Not very confident
10
6
7
6
7
5
3
3
No confidence
0
0
0
0
0
0
0
0
Change in confidence over the past six months (f)
Increased
3
7
1
2
4
22
9
0
Unchanged
69
78
58
77
73
72
81
71
Decreased
28
15
40
21
24
5
10
29
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. Between 2020 H1 and 2021 H1, the survey was paused due to Covid.
- (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) (d)
2017 H2
2018 H1
2018 H2
2019 H1
2019 H2
2021 H2
2022 H1
2022 H2
Cyber attack
57
62
66
60
61
74
79
74
Geopolitical risk
61
62
62
62
58
59
63
72
Inflation risk
5
6
6
6
2
33
63
72
UK political risk
91
91
97
93
96
40
26
34
Pandemic risk
0
0
0
0
0
57
51
31
Climate risk
1
1
1
4
15
33
24
23
Other
5
7
9
7
4
21
18
23
Risk of an overseas/global economic downturn
18
25
30
38
38
14
6
20
Risk of a UK economic downturn
34
26
30
23
23
12
14
20
Operational risk
9
7
3
4
6
21
29
20
Risk of financial market disruption/dislocation
18
16
18
27
31
31
24
17
Risk of tightening in credit conditions
2
2
2
5
0
5
11
17
Household/corporate credit risk
15
17
10
6
5
7
9
8
Risks around regulation/taxes
29
23
16
19
17
21
9
6
Risk of financial institution failure/distress
11
11
10
12
14
7
4
6
Risks surrounding monetary and fiscal policy
27
32
20
14
10
9
4
5
Risks around public anger against, or distrust of, financial institutions
0
0
0
0
0
0
3
5
Risk of property price falls
23
20
19
14
11
12
13
3
Sovereign risk
14
8
15
11
0
0
1
2
Funding risk
0
0
1
5
4
0
3
2
Risk of infrastructure disruption
5
5
7
5
4
2
0
0
Risk surrounding the low interest rate environment (e)
6
2
0
2
12
3
0
0
Risk of loss of confidence in the authorities
0
3
3
4
4
2
1
0
Risk surrounding cryptocurrencies
0
0
0
0
0
0
3
0
Risk of lack of confidence in ratings, valuations and disclosure
1
1
0
0
1
0
0
0
Number one source of risk to the UK financial system (f)
Inflation risk
0
0
0
1
0
12
23
38
Cyber attack
7
14
8
14
6
19
34
17
Geopolitical risk
7
11
3
5
5
2
13
17
Risk of a UK economic downturn
3
2
2
1
1
2
6
8
Risk of an overseas/global economic downturn
1
5
2
2
5
2
0
3
Risk of financial market disruption/dislocation
2
2
3
2
0
3
1
3
Risks around regulation/taxes
2
5
3
0
0
3
1
3
Risks surrounding monetary and fiscal policy
2
0
1
1
2
2
1
3
UK political risk
67
53
74
69
79
10
1
2
Pandemic risk
0
0
0
0
0
38
11
2
Climate risk
0
1
1
1
1
3
0
2
Risk of tightening in credit conditions
2
0
0
0
0
2
3
2
Household/corporate credit risk
2
2
0
0
0
0
0
2
Risk of financial institution failure/distress
0
1
1
0
0
2
1
0
Other
1
1
0
0
0
0
3
0
Risk of infrastructure disruption
0
0
0
2
0
0
0
0
Operational risk
0
0
0
0
1
0
0
0
Risk surrounding the low interest rate environment (e)
1
1
0
0
0
0
0
0
Sovereign risk
1
0
0
0
0
0
0
0
Risk of property price falls
1
1
0
0
0
0
0
0
Risk of lack of confidence in ratings, valuations and disclosure
0
0
0
0
0
0
0
0
Funding risk
0
0
0
0
0
0
0
0
Risk of loss of confidence in the authorities
0
0
0
0
0
0
0
0
Risks around public anger against, or distrust of, financial institutions
0
0
0
0
0
0
0
0
Risk surrounding cryptocurrencies
0
0
0
0
0
0
0
0
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-text 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. Between 2020 H1 and 2021 H1, the survey was paused due to Covid.
- (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) 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.
- (f) 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)
2017 H2
2018 H1
2018 H2
2019 H1
2019 H2
2021 H2
2022 H1
2022 H2
Inflation risk
0
5
1
1
3
23
46
61
Cyber attack
45
51
55
52
48
58
65
56
Geopolitical risk
36
37
39
35
32
32
40
48
UK political risk
70
52
80
82
75
25
10
14
Climate risk
0
1
1
3
4
21
15
13
Risk of a UK economic downturn
14
12
10
6
14
7
4
13
Risk of financial market disruption/dislocation
10
12
9
10
12
12
10
11
Operational risk
4
7
0
0
0
9
18
11
Risk of tightening in credit conditions
0
1
2
1
0
4
4
11
Pandemic risk
0
0
0
0
0
40
29
9
Risk of an overseas/global economic downturn
6
7
16
14
21
4
4
6
Other
5
3
4
6
1
16
13
6
Risks around regulation/taxes
15
15
7
11
8
16
6
5
Risk of financial institution failure/distress
7
4
4
8
8
5
4
5
Household/corporate credit risk
2
5
4
0
3
7
4
5
Risks surrounding monetary and fiscal policy
11
15
6
1
3
4
4
3
Risks around public anger against, or distrust of, financial institutions
0
0
0
0
0
0
1
3
Funding risk
0
0
1
3
1
0
1
2
Risk of property price falls
12
5
7
6
1
4
3
0
Risk of infrastructure disruption
4
4
5
4
4
2
0
0
Sovereign risk
5
3
5
8
0
0
0
0
Risk surrounding the low interest rate environment (d)
2
0
0
0
5
0
0
0
Risk of loss of confidence in the authorities
0
0
0
1
1
0
0
0
Risk of lack of confidence in ratings, valuations and disclosure
1
1
0
0
1
0
0
0
Risk surrounding cryptocurrencies
0
0
0
0
0
0
0
0
Cited at least one key risk, but did not cite any risk as challenging to manage (%)
13
16
8
12
13
0
0
0
Number of respondents citing at least one source of risk
96
87
89
81
84
58
70
65
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-text 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. Between 2020 H1 and 2021 H1, the survey was paused due to Covid.
- (c) Figures are expressed as nearest whole integer, so may appear inconsistent with figures shown in the text of the survey.
- (d) 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.
Risks most probable to materialise (a) (b) (c)
2021 H2
2022 H1
2022 H2
Inflation risk
23
58
63
Geopolitical risk
28
36
54
Cyber attack
58
55
37
Risk of UK economic downturn
9
10
20
UK political risk
26
9
18
Risk of an overseas economic downturn
5
3
18
Risk of tightening in credit conditions
2
7
17
Other
9
15
15
Climate risk
23
10
9
Risk of financial market disruption/dislocation
18
13
6
Operational risk
7
10
6
Household/corporate credit risk
5
4
5
Risks around public anger against, or distrust of, financial institutions
0
0
5
Risks surrounding monetary and fiscal policy
4
3
5
Risk of financial institution failure/distress
4
1
2
Funding risk
0
1
2
Risk of property price falls
4
4
2
Risk around regulation/taxes
9
4
2
Sovereign risk
0
0
2
Pandemic risk
46
36
2
Risk of infrastructure disruption
0
0
0
Risk of lack of confidence in ratings, valuations and disclosure
0
0
0
Risk of loss of confidence in the authorities
0
1
0
Risks surrounding the low interest rate environment (d)
2
0
0
Risks surrounding cryptocurrencies
0
0
0
Cited at least one key risk, but did not cite any risk as most likely to materialise (%)
0
0
0
Number of respondents citing at least one source of risk
58
70
65
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 were most probable to materialise. This element of the survey was introduced in 2021 H2. Answers were provided in a free-text 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. Between 2020 H1 and 2021 H1, the survey was paused due to Covid.
- (c) Figures are expressed as nearest whole integer, so may appear inconsistent with figures shown in the text of the survey.
- (d) 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.
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.
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.
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 question was introduced in the 2021 H2 survey.
