Despite risks, Canada’s financial system is resilient: GRI survey

The Covid-19 pandemic has dominated the economic landscape over the past year and it remains a key risk to the Canadian financial system in the year ahead, according to a survey of financial institutions by the Global Risk Institute (GRI).

The GRI’s latest annual survey, carried out between November 2020 and January, finds that chief risk officers at financial firms — including banks, insurers, pension funds and asset managers — rated economic risk as the top challenge to the financial system in 2021.

Cyber risk placed second, followed by climate change, the pandemic and credit risk, the GRI reported.

While the pandemic ranked fourth on the list on its own, it also factored in to the other top concerns, such as economic and cyber risk. For example, the GRI said that respondents expected the pandemic to continue affecting business operations throughout the coming year.

“Economic risk related to the slowdown of the economy and the threat posed by Covid-19 was top-of-mind and clearly articulated by the chief risk officers in the survey,” the GRI said in a release.

The pandemic also helped drive the industry’s cyber worries.

“Cyber risk remains a top concern as a result of the pandemic with more staff working from home, more devices accessing digital banking environments, and more people shopping online,” noted Sonia Baxendale, president and CEO of GRI, in a release.

Following 2020, respondents are much more attuned to the possibility of underlying systemic risks producing a “high impact” event in the year ahead, the GRI noted.

In this year’s survey, 78% said that a high impact event is very likely or likely, up from 48% in last year’s survey.

Despite the array of risks, the GRI noted that respondents were unanimous in their confidence in the ability of the Canadian financial system to weather these challenges.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.