The Dutch national bank DNB has warned financial institutions to identify and protect themselves against geopolitical risks, from protectionist economic policies to cyberattacks.

Presenting its overview of the next three years, the bank said banks, insurers and pension funds needed to build up their operational resilience and ensure they had enough financial buffers to absorb the impact of global events.

“For some years now, the Netherlands and Europe have not been able to take favourable international relations for granted,” executive board member Steven Maijoor said.

International trade has been increasingly influenced by protectionism, fragmentation and the division of the world into multinational blocks, the bank said.

American president-elect Donald Trump pledged during his campaign to raise import tariffs on goods from the European Union by between 10% and 20%, sparking fears of a transatlantic trade war.

Trump also says he will hit imports from China with 60% in extra tariffs, which could lead to the EU being flooded with cheap Chinese goods, experts say.

Hybrid conflicts

The Netherlands is “particularly sensitive” to geopolitical tensions because of its dependence on international trade, which increases its exposure to cyberattacks and sanctions, through loans to companies in sanctioned territories.

“Conflicts between countries have increasingly taken on a hybrid character,” the bank wrote in its report. “Governments are repeatedly deploying far-reaching means that blur the boundaries of legitimacy.

“This includes the use of means such as diplomatic and financial sanctions, import and export limitations, cyber attacks and espionage.”

Maijoor praised the EU’s Digital Operational Resilience Act, which comes into force in January, as a step towards improving digital security by tightening the regulations for outsourcing IT contracts.

The banks said co-operation between the public and private sectors was “crucial” for improving the resilience of “vital infrastructure” such as telecommunications, electricity supplies and digital banking.

Maijoor said Europe needed to finalise its banking and capital market union to ensure it remains a strong player with a diverse financial system, while supervision also needed to be organised on a European scale.