Higher inflation, soaring energy prices and the ongoing conflict in the Middle East pushed asset and market risk into ‘high’ on the European Insurance and Occupational Pensions Authority's (EIOPA) April dashboard.
The dashboard ranked asset and market risk at a high level of risk, shown by the colour orange.
EIOPA cited inflation, high energy prices and the Middle East conflict as key elements affecting the macroeconomic environment, and added that growing doubts around the abilities of artificial intelligence (AI) were “adding to sensitivities”.
The authority said that financial markets were being tested by “geopolitical uncertainty” and that bond spreads had widened and equity volatility had spiked towards the end of March, leading to potential vulnerability due to high valuations.
The dashboard report stated: “Looking ahead, the risk outlook for the next 12 months is increasing amid persistent geopolitical instability.”
The ‘assets and markets’ category was the only one evaluated that was highlighted as ‘high risk’ in the April dashboard.
Other risk categories (macro, credit, liquidity, concentration, ESG-related and digitalisation and cyber) were all rated ‘yellow’ or medium risk.
