The Top Five Risks Impacting Canada’s Financial Sector
Global Risk Intitute’s annual Risk Outlook Survey highlights the most pressing risks facing Canadian financial institutions (FIs), drawing insights from senior risk professionals representing banks, credit unions, insurance companies, pension funds, and government agencies. The report reflects data collected between November 2024 and January 2025.
Respondents to the survey identified the following as the top five risks for 2025:
- Cyber Risk – The most significant concern, with nearly half of respondents stating they are difficult to manage. The increasing frequency and sophistication of cyberattacks, combined with the risks posed by AI, heighten this concern.
- Geopolitical Risk – Driven by uncertain trade relations, potential tariffs from the U.S., and political instability in Canada, this risk is causing economic uncertainty, affecting investment decisions and business confidence.
- Technology & Disruption Risk – AI and fintech developments pose both opportunities and challenges, requiring financial institutions to manage rapid change while ensuring regulatory compliance and operational stability.
- Economic Risk – While financial institutions are experienced in managing economic cycles, the impact of potential U.S. trade policies, inflation, and global market shifts remain key concerns.
- Third-Party Risk – Making the list for the first time, this risk has grown as FIs increasingly rely on external providers, especially in technology and AI services. Regulatory expectations have tightened, requiring closer oversight of third-party relationships.
The inclusion of third-party risk as a top concern underscores the growing complexity of risk management as financial institutions expand their reliance on external service providers. This trend, coupled with rising geopolitical tensions and rapid technological shifts, signals an increasingly volatile landscape for the Canadian financial sector in 2025.