Enhancing Business in a Financial Risk Prone Market

IN YOUR OPINION, HOW HAS THE FINANCIAL RISK MANAGEMENT LANDSCAPE EVOLVED OVER THE YEARS?

Financial risk management became a critical component for financial institutions as a result of the financial crisis over a decade ago. It has evolved over the past 10 years due to regulatory changes that were put into place as a result of the crisis. Likewise, the focus for risk management has changed over the years and now includes additional risks such as operational risk, third party risk, cybersecurity risk, business continuity risk and model risk, in addition to credit, market and liquidity risk. Because of this, financial institutions had to adapt to the changes in the risk landscape and enhance their risk programs to effectively address these additional risks.

WHAT ARE SOME OF THE ADVANTAGES OF THE CURRENT TECHNOLOGICAL EVOLUTION?

Technology continues to grow, and while this has increased risk concerns, it has also provided better analytical tools to manage risk. The use of models gives institutions the ability to make better business solutions. Automation provides efficiency and has helped to streamline risk management processes.

WHAT ACCORDING TO YOU ARE SOME OF THE CHALLENGES PLAGUING THE FINANCIAL RISK MANAGEMENT LANDSCAPE AND HOW CAN THEY BE EFFECTIVELY MITIGATED?

• Keeping pace with the ever-changing regulatory landscape
• Managing cyber risk
• Building and maintaining a risk culture
• Identifying emerging risks

Risk Departments have to continue to be proactive versus reactive. We need to continue to enhance our programs and keep abreast of regulatory changes and expectations. Also, promoting a risk culture across the enterprise to ensure risk is considered in all business aspects helps with mitigation efforts.

Staffing in the risk area especially regarding cybersecurity is crucial to the success of a financial institution’s risk well-being, therefore, having the right resources with the experience needed to manage risk is extremely important to strengthening and maintaining a robust risk program.

WHAT ARE A FEW TECHNOLOGICAL TRENDS INFLUENCING FINANCIAL RISK MANAGEMENT TODAY?

• The use of more online tools
• Expanded mobile applications with more automated processes
• Digital economy / cryptocurrency
• Remote workforce

WHAT ARE SOME OF THE BEST PRACTICES BUSINESSES SHOULD ADOPT TODAY TO STEER AHEAD OF COMPETITORS?

• Know your competitors
• Provide quality customer service-It seems today, regardless of the industry, good customer service is no longer the norm. This can set you apart from your competitors.
• Be an employer of choice- If you do not hire or retain good employees, this will negatively impact your image.
• Know your customers so you can tailor products and services to meet their needs

DO YOU HAVE ANY ADVICE FOR INDUSTRY VETERANS OR BUDDING ENTREPRENEURS FROM THE FINANCIAL RISK MANAGEMENT SPACE?

Risk is inherent in any business. This does not mean that businesses should avoid risk, rather they need to identify and mitigate the risks so they can still meet their strategic objectives. Risk should be considered in all business activities. Businesses should develop a well- designed risk program to appropriately manage risk. Be proactive rather than reactive when taking steps to mitigate potential risks that can be encountered during the normal course of business. Develop growth strategies to minimize financial risks.