global tail risks
unexpected liquidity crunch
A sudden drying up of liquidity in some of the most fluid markets in the world can create terrifying moments for investors. Here’s partly why: As of 2021, the size of the bond market (total debt outstanding) was estimated to be $119 trillion worldwide, and $46 trillion for the US market.
UNEXPECTED LIQUIDITY CRUNCH
The tensions between mainland China and Taiwan appear to be headed to a boil, and investors feel unprepared for the potential ramifications. A one-year shutdown for Taiwan’s semiconductor production would cost an estimated $490B in annual revenue for device makers worldwide. Meanwhile, about half of the world’s container ships passed through the Taiwan Strait in the first seven months of 2022.
SWIFT, the global payments messaging system used by financial institutions around the world, supports trillions of dollars every day crossing borders. Only 30% of our respondents said they are prepared for a major cyberattack on SWIFT or another financial platform – despite this being seen as one of the most likely tail risks to occur over the next three years.