Cyber threats, macroeconomic & geopolitical uncertainty to change risk landscape
- 4 May 2022
Speed of change is making assessing emerging risks difficult according to our latest Operational Risk Horizon report, which is now available for free to member and for non-members to purchase for just £900. The report predicts cyber threats, macroeconomic change and geopolitical turbulence will significantly influence the emerging risk landscape.
Insights from the 2022 study
The report reveals that the industry is grappling with how to assess and monitor the emerging risk landscape given the speed of change both within and outside of financial services firms. It's based on a survey of over 50 financials firm and was conducted immediately prior to the conflict in Ukraine. Despite this, advanced cybercrime, in particular cyber warfare, is cited as the most worrying emerging risk category.
“With a high level of organisation and sophistication, often state-backed, groups of cyber criminals are displaying agility and adaptability. Since the survey was carried out, we have seen the Ukraine conflict resulting in financial services institutions across the world further raising their alerts against cyber-attacks, and the threat is now both immediate and rapidly evolving.”
Steve Bishop, Research & Information Director at ORX
In addition to cyber warfare, other top concerns mentioned around cyber crime included:
- Ease and speed of attack – automation and AI allow cyber criminals to quickly adapt and learn while the commoditisation of cybercrime means specialist skills are no longer required
- Lack of internal expertise and skills to prevent attacks
- Evolving and emerging cyber fraud types, typically exploiting emerging technologies
Complex digital ecosystem
The second and third largest risks identified in the report are digital strategies and emerging technologies. The report shows a broader and more complex digital ecosystem has emerged and will continue to evolve. Accelerated by the pandemic and competition from digital disruptors, this includes traditional market players rapidly digitalising across a range of organisational areas with increasing use of AI and Application Programming Interfaces (APIs).
The technology of greatest concern selected by the survey participants was AI (79%) followed by APIs (38%), robotics/robotic process automation (PRA) (33%), digital currencies (33%) and blockchain (21%).
Whilst it remains important for many report participants, climate and natural catastrophe has fallen as a priority overall due partly to the immediacy of other threats and the complexity and transversal nature of the issue.
“The world is more turbulent than it has been in a long time. The events of more than the last 24 months have created a highly dynamic and uncertain risk landscape. As a result, the focus is on the here and now as well as the things we are able to assess, but we do also urge firms to incorporate additional longer-term horizon scanning to facilitate more predictive analysis to identify future changes in the risk landscape.”
Steve Bishop, Research & Information Director at ORX
Impact of Ukraine conflict on operational risk landscape
The 2022 Horizon report includes editorial comment of the evolving situation in Ukraine including setting out some of the potential downstream changes to emerging risk profiles. Since the Horizon report was published, ORX has hosted several virtual roundtables with their members to discuss the operational risk impacts of conflict. The roundtables highlight that, amongst other risks, the last two months of global turbulence will have had a pronounced effect again on the impact of cyber threats.
Read the highlights from the roundtables
Access the full study for the complete results
This report was conducted as part of our new range of monitoring the risk landscape studies, which cover both emerging and material risks. The studies are free for ORX members and if you're not a member of ORX, you can buy a copy of the Operational Risk Horizon 2022 report for just £900.