China's regional and local governments play a critical role in mitigating and potentially transmitting economic and financial risks within China’s highly interconnected institutional framework, economy and financial system. Although we consider systemic risk in China to be low overall, our heat-map-based analysis of mainland China’s 31 provinces points to higher potential risks in the west and northeast of the country.

Successful cyberattacks can hurt banks' credit standing through financial losses, erosion of brand value and trust, and regulatory consequences. Improving cyber governance and regulatory scrutiny help mitigate risk, but cyber exposure will lead to higher operating, legal and regulatory costs for all banks regardless of whether particular threats materialize.

China's ongoing trade tensions with the US, slowing growth and the rebalancing of its supply chain away from imports present risks for a number of countries in the European Union. In terms of sector exposure, the machinery, motor vehicles, chemicals and pharmaceuticals industries account for the largest amount of EU exports to China on an absolute basis.