Broadly resilient does not mean low risk. According to the Institute of Risk Management South Africa’s Risk Report 2026/27, South Africa’s financial services sector remains broadly resilient, but it faces mounting pressure from weak economic growth, elevated sovereign risk, cyber threats, and rising operational costs. At the same time, the report identifies opportunities in digital innovation, financial inclusion, and regional expansion.
Published annually, the report examines the principal risks facing South Africa and the broader Southern African region, from governance and infrastructure to climate change, technology, and financial services. Its central finding is simple: these risks no longer operate in isolation. They reinforce one another, meaning a sector can remain fundamentally resilient while becoming increasingly exposed to pressures originating well beyond its own boundaries.
IRMSA also sees financial inclusion and digital innovation as important drivers of long-term growth.
The financial services chapter explores how economic conditions, cyber threats, fraud, climate change, and broader structural pressures are reshaping the environment in which financial institutions and their clients operate.
Four pressures reshaping financial services
IRMSA identifies 10 interconnected risks shaping Southern Africa’s operating environment: governance and leadership failure, economic crisis and macro-economic weakness, political instability, critical infrastructure failure, unemployment and inequality, climate change, systemic corruption and organised crime, cyber risk and digital disruption, water scarcity, and electricity and energy insecurity.
All have implications for financial services, but four emerge repeatedly throughout the chapter because of their direct impact on financial institutions and the people they serve: economic weakness, cyber risk, fraud, and climate change.
Economic conditions remain the starting point. Weak growth and elevated uncertainty are already changing client behaviour.
Weak growth and elevated uncertainty reduce credit demand, constrain profitability, and make investment decisions more cautious. Businesses delay expansion, and financial institutions face greater pressure to achieve their strategic and financial objectives.
The report also points to infrastructure failures, energy insecurity, unemployment, and inequality as structural pressures that raise operating costs, weaken household resilience, and increase credit risk across the economy.
Cyber risk receives particular attention. As financial institutions rely more heavily on cloud services, artificial intelligence, and third-party technology providers, the sector’s digital exposure continues to expand. Expectations around cyber resilience, incident management, and regulatory reporting are rising at the same time. IRMSA warns that increasingly sophisticated attacks – including ransomware, phishing, data theft, and supply-chain attacks – have the potential to disrupt banking and payment systems, expose sensitive information, and erode confidence in digital financial services.
Fraud is another area where the report expects pressure to persist. External and internal fraud can result in client harm, financial losses, and reputational damage, while broader governance failures can undermine confidence in financial institutions. Financial crime, it notes, is closely linked to wider governance and organised crime risks that extend well beyond the sector itself.
Climate risk is no longer treated simply as an environmental issue. IRMSA frames climate change as a financial risk as well as an environmental one that affects clients, counterparties, and investment decisions. Physical climate impacts and the transition to a lower-carbon economy are creating new risks that financial institutions are expected to incorporate into their core risk frameworks, while adapting to evolving disclosure and reporting requirements.
Climate change is also closely linked to water scarcity, infrastructure failures, and energy insecurity, all of which have implications for growth, credit quality, and operating costs across multiple sectors of the economy.
Beyond markets: the risks shaping client outcomes
One of the more interesting observations in the report is that many of the biggest risks facing financial institutions originate well outside the sector itself. Yet they ultimately shape lending decisions, investment outcomes, insurance risks, and household finances.
Infrastructure illustrates the report’s central theme of interconnected risk. IRMSA says unreliable transport, water, energy, and digital infrastructure increase operating costs for businesses and households while raising default risk in lending portfolios. At the same time, the report sees opportunities for private investment in infrastructure and related financing solutions.
Water tells a similar story. Growing water stress can affect financial institutions’ own operations and technology while increasing credit strain in water-dependent sectors and weighing on broader economic growth. The report argues that water stress also has clear financial implications.
The same applies to unemployment and inequality. Persistent economic hardship weakens household resilience, increases the likelihood of social unrest, and dampens market confidence. It also affects households’ ability to save, invest, and service debt, creating knock-on effects across the financial system.
Political uncertainty and energy insecurity round out the picture. According to IRMSA, political instability can delay investment decisions and reduce operating certainty, while an unreliable electricity supply continues to increase the cost of doing business and weigh on economic growth.
Where the opportunities lie
The report deliberately pairs each major risk with a corresponding opportunity. Many of the same forces reshaping financial services are also creating new opportunities.
Digital innovation sits at the centre of that shift. The report identifies fintech, digital financial services, and advances in data analytics as important drivers of future growth and operational efficiency, broadening access to financial products, and strengthening customer engagement. IRMSA also highlights regulatory technology (RegTech), supervisory technology (SupTech), and advanced analytics as tools that can strengthen oversight and help institutions to respond more effectively to an increasingly complex regulatory environment.
Financial inclusion is another recurring theme. IRMSA argues that expanding access to financial services for households, small businesses, and underserved communities – supported by transparent products, effective customer protection, and improved financial literacy – can strengthen both consumer confidence and the resilience of the financial system.
The report similarly identifies opportunities arising from the transition to a more climate-resilient economy. As financial institutions incorporate climate considerations into their risk frameworks, IRMSA expects continued growth in sustainable finance, climate-risk integration, and products that support the transition to a more climate-resilient economy.
Beyond South Africa’s borders, regional integration through the African Continental Free Trade Area (AfCFTA) offers further opportunities for financial institutions to expand their footprint and develop products and services for a more integrated African market.
Building resilience into financial advice
Throughout the report, one theme emerges repeatedly: resilience will increasingly determine how well financial institutions respond to a more complex risk environment.
IRMSA identifies stronger governance, cyber resilience, conduct risk management, financial inclusion, and digital innovation as priorities for maintaining confidence in the financial services sector.
It also recommends greater use of stress testing and scenario planning to help institutions prepare for increasingly interconnected risks. Climate-aware portfolios, stronger collaboration on anti-money laundering and counter-terrorist financing, cyber threat intelligence sharing, and wider use of data and analytics all form part of a broader approach to strengthening resilience across the financial system.
Resilience also depends on trust. The report points to transparent communication, effective complaints handling, and improved financial literacy as important contributors to confidence in financial services, particularly as institutions seek to expand access to underserved markets.
Financial risks no longer operate in isolation. Governance, cyber resilience, climate risk, operational resilience, and household vulnerability increasingly interact and need to be managed together.
Click here to download the 2026/27 Risk Report.
