Developments in the housing market also remain a priority, with DNB paying particular attention to the risks associated with fixed rate mortgages. Now that home prices are falling slightly and interest rates are rising, such mortgages carry greater risk.
There are other integrity risks, which also apply to trust offices and cryptographic service providers, for example. If it’s up to DNB, the fight against issues like money laundering and terrorist financing will be more risk-based. Among other things, better use of data and “responsible innovation” by financial institutions should help.
Risk coverage
For insurers, DNB will further look into rising interest rates and the steps insurers are taking to limit the consequences. This involves, for example, hedging these risks with financial products. In the UK, pension funds struggled to pay for the rising costs of such products when interest rates on government debt rose sharply recently. This was due to former Prime Minister Liz Truss’s announcement that the government would borrow a lot of money to lower taxes.
The DNB also looks at cyber resilience. This resilience to cyberattacks is also important for pension funds. In addition, oversight for that sector will focus primarily on the transition to the new pension system, DNB predicts.