The financial services industry faces an evolving landscape of risks heading into 2025, as identified by the Depository Trust & Clearing Corporation’s (DTCC) latest annual Systemic Risk Barometer Survey. The survey reveals that geopolitical and cyber risks remain at the forefront of concerns, signaling potential volatility and disruption within global markets.
Geopolitical risks and cybersecurity threats are identified as the top concerns for the financial services industry in 2025.
US political uncertainty, inflation, and potential economic slowdown also rank high in shaping market conditions for the year ahead.
The rise of fintech adoption brings new risks, requiring firms to strengthen their technological resilience and risk management strategies.
Geopolitical risks dominate financial concerns
For the third successive year, geopolitical risks were voted the top risk faced by the financial services industry. As many as 84% of respondents in a survey consider the geopolitical tensions capable of upsetting financial markets in 2025. Global wars and trade conflicts coupled with shifts in power and imbalances remain strong factors for an unstable market scenario, but possibly large events capable of affecting it significantly.
With rising tensions between Eastern Europe, the United States, and China, the uncertainty in global politics has created a difficult environment for businesses around the world. The financial institutions will now have to consider how they will operate amidst such challenges and ensure stability in their operations.
Cybersecurity threats on the rise
Cyber threats were identified as the second most significant risk, and 69% of the respondents indicated the same. Cyber threats have exploded since last year and have shown an increase to 50%. This is at a time when financial institutions are integrating emerging technologies like AI and machine learning, thus increasing cyber threats. Complexity and sophistication are becoming the main issues in the face of cyber threats, further complicated by geopolitical aspects. These include the attacks on critical infrastructure, data breach, and ransomware attacks, which are some of the most serious threats to destabilize financial institutions.
Given this reality, organisations must adopt strong cybersecurity frameworks, then continue updating their risk management strategy and investing in technologies for fighting these ongoing dangers.
US political uncertainty and economic slowdown
US political uncertainty, in general, such as post presidential election events was rated the number one risk factor by 48% of participants. With regard to elections that frequently create uncertainty in markets and even a shift in economic policies, financial service providers are also following these very closely, knowing well the risk factor on stability. It would thus be highly critical for their prediction capabilities concerning regulatory changes, tax changes, and changes in trade policies.
Similarly, threats included inflation and a possible economic slowdown in the US. With inflationary pressures and the threat of deceleration in the economy, financial firms must prepare for fluctuating market conditions that would strain liquidity and assets.
Emerging risks from fintech adoption
Other than the above-described major risks, the increase in fintech along with its potential risks is relatively a new risk to be concerned with for 2025. Through use of robotic process automation and AI, system vulnerability and technology flaws are more of a worry that becomes associated with certain financial products. As more firms deliver fintech solutions, their technological dependencies must be evaluated in relation to the risks with these innovations.
The constantly changing nature of the global financial landscape demands the vigilance of firms in handling risk management. Regular scenario planning, updating of recovery strategies, and employee training are important tools for managing the risks and resilience in uncertainty.
With increasing cyber threats, geopolitical instability, and other emerging risks looming, 2025 will surely be the test of financial institutions' system strength in facing risks. The ability to quickly adapt to these challenges will be the key to navigating the complexities of the next year.