Geopolitical & Cyber Risks Are the Biggest Worries for Denmark’s Financial Sector

Key Takeaways

• Cyber and Geopolitical Risks Dominate Concerns: Cyber threats remain the top concern for Denmark’s financial institutions, but geopolitical instability—such as war in Ukraine, hybrid warfare, and global tensions—is now nearly on par, with 63% of firms expecting it to negatively impact the system in the coming years.
• Cyber Risks Seen as Hardest to Manage: Sixty percent of financial firms say cyber risks are the most difficult to handle, followed by geopolitical risks at 49%, as both threats grow more complex and harder to mitigate.
• High Confidence in Financial Stability: Despite growing threats, 82% of surveyed institutions remain confident in the stability of Denmark’s financial system over the next three years, although 15% noted a slight decline in trust over the past six months.
• Emerging Risks from Financial Products and Markets: Short-term, high-leverage variable-rate loans and the unregulated crypto market are flagged as growing vulnerabilities that could pose threats to financial stability.
• Finanstilsynet Boosts Cyber Resilience Efforts: Denmark’s financial watchdog is ramping up cyber stress testing and enhancing oversight in line with the new EU Digital Operational Resilience Act (DORA), reinforcing efforts to strengthen the sector’s preparedness.

Deep Dive

As the world continues to grapple with a rapidly changing geopolitical landscape and the persistent threat of cyber attacks, financial institutions in Denmark are facing a unique set of challenges. While these concerns are growing, one thing is clear—confidence in the stability of Denmark’s financial system remains remarkably high. A recent survey conducted by the Danish Financial Supervisory Authority (Finanstilsynet) shows that geopolitical issues and cyber risks are at the top of the list for what’s keeping Denmark’s financial firms awake at night.

Niki Saabye, head of the Economic Secretariat at Finanstilsynet, noted, “Just like last year, the main worries are geopolitical tensions and cyber threats. But what’s interesting is that geopolitical risks are now almost on par with cyber threats in terms of concern.” These issues, while not new, have gained increased significance, with financial firms paying close attention to how they might impact stability.

In February 2025, 35 major financial firms took part in a survey asking them to assess the current risks facing the financial system. As expected, cyber threats continue to be the number one concern. But this year, geopolitical issues—ranging from the ongoing war in Ukraine and Russia’s hybrid warfare to the Middle East’s instability and shifts in U.S. policy—are making an even bigger splash.

While these concerns are significant, they aren’t the easiest to manage. The survey revealed that not only are cyber risks considered the most pressing concern, but they’re also viewed as the hardest to handle. Cybersecurity remains a challenge for many institutions, especially as attacks become more sophisticated and frequent.

Despite the rising concerns, a majority of financial companies in Denmark still have high confidence in the system’s stability. About 82 percent of respondents indicated that they believe Denmark’s financial system will remain stable over the next three years. Even though some have expressed concerns, the overall confidence level remains strong.

Confidence in Stability

While cyber threats and geopolitical instability are at the forefront, the overall sense of confidence in Denmark’s financial system is noteworthy. Of the companies surveyed, 82 percent trust that the financial system will stay stable over the next few years. That’s a reassuring statistic, but the survey also noted a slight dip in confidence. About 15 percent of firms said their trust in the stability of the system has decreased slightly in the past six months, though most respondents feel optimistic about the long-term outlook.

Saabye shared that Finanstilsynet is actively addressing these challenges, particularly cyber threats.

“We are focused on cyber risks right now. We’re in the middle of our second round of cyber stress tests and scaling up our supervision in line with the new Digital Operational Resilience Act,” he explained. This focus on cyber resilience is part of a broader effort to ensure that Denmark’s financial institutions are prepared for whatever challenges may come.

Cyber and Geopolitical Risks

When asked about the most difficult risks to manage, the results were clear. Sixty percent of firms said that cyber risks are the most challenging to deal with, while 49 percent of firms said that geopolitical risks are just as difficult to handle. Not only are these risks tough to manage, but they’re also viewed as the most likely to affect the financial system. Sixty-three percent of respondents believe that geopolitical risks could have a negative impact on the financial system within the next few years, a significant rise from last year’s survey.

These findings highlight how the landscape is shifting. The combination of rising geopolitical tensions and increasingly sophisticated cyber threats has become the financial sector’s most formidable challenge.

New Financial Products and Risks

The survey also delved into financial products that could potentially increase the risk to the financial system. High-risk variable-rate loans, particularly those with short terms and high leverage, are major concerns. Likewise, cryptocurrencies and unregulated markets continue to raise alarms, given the risks they pose to financial stability.

But perhaps the most telling part of the survey is the assessment of how likely it is that Denmark’s financial system will experience a significant negative shock. On the short-term horizon (0-12 months), 65 percent of respondents considered the risk to be low or very low, but that outlook changes when looking further ahead. Over the next 1-3 years, half of the respondents viewed the risk as moderate, with 18 percent believing that the chance of a shock is higher than previously expected.

Even as risks continue to rise, confidence in Denmark’s financial system holds steady. While the survey showed a slight decline in confidence over the past six months, with 15 percent of companies expressing less trust in the system, the majority of respondents remain confident in the long-term stability of the system.

As Saabye and his team continue to monitor these risks, it’s clear that the financial sector’s focus on resilience will remain key in navigating the challenges ahead. Geopolitical instability and cyber threats are not going away anytime soon, but Denmark’s financial institutions are making strides to stay ahead of the curve. While the future remains uncertain, one thing is certain—confidence, preparedness, and a focus on resilience will guide the Danish financial system through the storms on the horizon.

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