Goldman Sachs (GS) CEO Lloyd Blankfein says he spends 98% of his time thinking about 2% worst contingencies. What are those 2% contingencies he’s thinking about today?
“Oh my goodness, I’m worried about, you know, anything having to do with cyber,” Blankfein told Yahoo Finance. “I’m worried about the impact of rate rises, whether that happens in a controlled way, and what the impact of higher rates are to asset valuations and therefore people’s portfolios and the reaction to that. I worry about financing, to some extent financing the countries in southern Europe. I worry about Brexit and the impact on the EU and other countries that might be distressed there. I worry about macro and geopolitical events in general. And so there’s no lack of projects at Goldman Sachs and the risk management sphere.”
Even as these risks are on his mind, Blankfein nevertheless sees the economy continuing to grow.
Presently, the U.S. economy is at or near full employment, housing prices have more than recovered from the housing crash, and consumer and business optimism are at record highs. Some economists warn the U.S. is due for a recession.
“I predict that the business cycle hasn’t been repealed,” Blankfein said. “We’re, at some point, due for a recession. But there is nothing that looks like it’s going to be tomorrow.”
In the near term, the data indicates that it’s a “pretty benign environment,” he added.
“In the long term, my core business, my job at Goldman Sachs, is to think about all the things that could go wrong,” he said. “I could spend two days of telling you the things I’m worried about. But my base case is that the near-term looks kind of benign. And in fact, kind of positive relative to the other periods in which I’ve worked.”
Blankfein spoke to Yahoo Finance at the firm’s third-annual Analyst Impact Fund, a contest where analysts from around the world compete for the chance to pitch the senior partnership committee to earn grants for nonprofits in their communities.
Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter.