What are the top risks that wealth managers should prepare for? The CFA Institute seeks to find the answers.

Geopolitical shocks, AI-driven cyberattacks, opaque data-centre financings and sudden extreme climate events are the most immediate threats to global financial stability, according to a report from the CFA Institute Systemic Risk Council (SRC).

The report, Ranking Systemic Risks and Vulnerabilities, scores 13 threats on their immediacy, the speed at which they could spread and whether their consequences could be irreversible. The SRC said each of the four highest-ranked risks could disrupt critical infrastructure or freeze international capital markets within hours.

The SRC is a group of former policymakers and financial experts convened under the CFA Institute, the global association of investment professionals. Its co-chairs are Simon Johnson, the 2024 Nobel laureate in economics and a former chief economist of the International Monetary Fund, and Erkki Liikanen, chairman of the IFRS Foundation board of trustees.

Artificial intelligence features in several places in the rankings. Beyond cyber attacks on financial infrastructure, the council flags AI-related investment concentration and market bubbles, misinformation and labour market disruption.

“The next financial crisis may not begin in a bank. It could begin with a cyberattack on payment systems, a geopolitical confrontation or the sudden collapse of a crowded investment thesis,” Johnson said.

Over the medium term, the report identifies three structural vulnerabilities. The first is weaker financial safeguards: reduced capital protections at systemically important banks, combined with rising leverage and limited transparency among non-bank financial institutions. The second is sovereign debt, where high structural deficits, rising borrowing costs and possible policy errors could undermine confidence in government bond markets. The third is the growing links between crypto assets, stablecoins and traditional financial institutions, which the council said create new channels for contagion.

Longer-term threats mentioned in the report include AI-related job displacement, gradual climate change and pandemics.

The SRC said the rankings are a qualitative assessment of where vulnerabilities are building, not a forecast of whether or when events will occur. The report draws on research from the IMF, the Financial Stability Board, the Bank for International Settlements and the World Economic Forum, alongside discussions among council members. It is aimed at regulators, policymakers and market participants seeking to prioritise preparedness.