Most UK asset managers believe cyber risk is now the biggest threat to their business over the next three years, according to new research from KPMG UK.
KPMG’s latest Wealth and Asset Management Risk and ICARA Benchmarking Survey shows that 92% of respondents ranked cyber among their top five risks, a sharp rise from 52% last year, with 41% identifying it as their single biggest threat. Despite this, financial crime, which is often closely linked to cyber attacks, was cited as a key concern by only 18% of firms.
As asset managers grapple with the tech agenda, operational resilience took second spot, up 40% year-on-year, while failure to evolve business models, AI and the macro-outlook all sit jointly in third place.
Daniel Barry, Partner and Head of Risk & Compliance for Wealth and Asset Management, KPMG UK, commented: “This dramatic rise in cyber risk awareness signals a new era for asset managers. In an increasingly digital landscape, resilience against cyber threats and information security breaches is non-negotiable.
“The stark contrast between concerns about cyber risk and financial crime raises the question of whether asset managers fully recognise how the risks intersect, and whether they are taking an integrated approach to assessing both.”
40% of firms plan to launch retail private asset vehicles
Innovation remains an important theme across the sector, with 40% of firms planning to launch retail private asset vehicles. Almost half (49%) of CROs cited private credit as the riskiest asset class within private markets, ahead of private equity (40%) and infrastructure (5%). And yet, it is also the most popular asset class for planned retail product launches. Manual controls and limited data automation are considered the biggest risk and compliance challenge in private markets.
Wind-down timelines double FCA expectations
Wind-down timelines adopted by asset managers are on average 18 months, double the FCA’s minimum expectation of nine months. When it comes to wind-down scenarios, reputational damage is the most common risk included (74% of respondents), followed closely by market stress (71%). The inclusion of both scenarios has significantly increased compared to 2024**.
Rob Crawford, Prudential Risk Lead for Wealth and Asset Management, KPMG UK, commented: “Firms are allowing double the minimum required time to manage an orderly wind down, highlighting how much importance they’re placing on responsible governance and risk management. The rise in reputation and market risk within winddown scenarios is also a positive sign that the industry is evolving in line with the global risk landscape.”
The FCA continues to closely scrutinise wind‑down plan assessments, particularly for firms that have grown rapidly or have a history of risk or conduct issues. The FCA challenged key assumptions in approximately 45% of the firms assessed, while more than a third were found lacking sufficient operational detail. These findings highlight the regulator’s increasing expectations around the robustness and operability of wind‑down planning.
