© BaFin/Matthias Sandmann
Foreword by BaFin’s President
Overall, the financial system proved to be stable in 2024. In recent years, companies in the financial sector have had to deal with the challenges of a changing interest rate environment. For the most part, they have coped well with this. However, during this time, the economy weakened and geopolitical conflicts increased.
2025 could be even more challenging. Economic risks could place an even greater burden on banks' loan books and insurers' investment portfolios.
These challenges are compounded by growing political uncertainty and the increasingly digital nature of geopolitical tensions and conflicts. The number of government-initiated cyberattacks on critical infrastructure companies, which includes companies in the financial industry, is rising.
Such attacks can seriously jeopardise financial stability. This is in part because companies in the financial sector are increasingly outsourcing IT services – and are relying on only a small number of service providers. This results in risky dependencies and market concentration.
Companies must be prepared for these and other developments. BaFin is also preparing itself: it analyses the risks for all market participants and consumers on a continuous basis and reacts accordingly.
The present “Risks in BaFin’s Focus 2025” report is BaFin’s fourth annual compilation of the risks that are most capable of jeopardising the financial stability or the integrity of the financial markets in Germany. This year, we will be focusing our attention primarily on these risks.
In 2025, we will focus on six risks in particular:
- Risks arising from corrections on the real estate markets ⇨
- Risks arising from significant corrections on the international financial markets ⇨
- Risks arising from corporate loan defaults ⇧
- Risks arising from cyber incidents with serious consequences ⇧
- Risks arising from inadequate money laundering prevention ⇨
- Risks arising from market concentration due to the outsourcing of IT services ⇧
For the first time, we are not including interest rate risks in this list. This is because an upward interest rate shock has become less likely due to the current interest rate level at the beginning of 2025 and the development of inflation. The increased interest rate risks of the past have largely been minimised.
The order of the risks does not reflect their prioritisation. The trend arrows indicate the future development (increasing, constant, decreasing) BaFin is anticipating.
The specific steps BaFin will take to mitigate these six major risks are detailed in the individual risk descriptions.
In addition to the six major risks, the way in which the companies under BaFin’s supervision deal with longer-term trends will also be significant. These include digitalisation, geopolitical upheavals and sustainability.
As in previous years, it should be noted that not all of the scenarios described in this “Risks in BaFin’s Focus 2025” report will materialise, and new risks may emerge. BaFin looks to identify such emerging risks at an early stage and react quickly.
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Main Risks in BaFin’s Focus
1. Risks arising from corrections on the real estate markets
2. Risks arising from significant corrections on the international financial markets
3. Risks arising from corporate loan defaults
4. Risks arising from cyber incidents with serious consequences
5. Risks arising from inadequate money laundering prevention
6. Risks arising from market concentration due to the outsourcing of IT services
