Navigating volatility, AI and geopolitical uncertainty

Market risk leaders across banks, asset managers and energy firms described an uneasy equilibrium. While volatility has moderated since 2023, several noted that, beneath the surface, stresses are quietly accumulating, with executives recalling pre-crisis patterns of misplaced confidence. The concern today, they said, lies in private markets and structured products, where transparency remains limited despite vast capital inflows.

Key takeaways:

• Volatility and complacency coexist: markets appear calm, yet participants sense latent vulnerabilities reminiscent of the pre-2008 period.
• AI is rapidly changing market risk analysis, enabling faster scenario generation and portfolio diagnostics, but governance remains the critical bottleneck.
• Private credit and structured finance are emerging as potential sources of hidden leverage and opacity in the next downturn.
• Data transparency and model explainability are becoming strategic priorities as regulators probe ‘black box’ risk methodologies.
• Geopolitical risk and political interference are reshaping confidence in official data and macro indicators.
• Energy market transitions and deglobalisation are creating new pricing challenges across commodities and interest rate markets.
• The shift towards intraday and real-time risk monitoring continues, but many buy-side firms still rely on end-of-day analytics.
• Talent and technology convergence is accelerating as risk teams demand hybrid expertise – market knowledge plus coding and AI literacy.