Digitization and automation can help financial institutions improve efficiency and security and manage risk. An indispensable component for smooth and efficient functioning, clean data that is obtained with the support of dedicated data cleansing services must be protected from internal and external risks. Risk management capabilities will have to monitor threats while also keeping up with the day-to-day changes in the business. Changes will have to be introduced also to the organization’s risk, regulatory and compliance processes as the business model gets digitized. The following are the popular trends that risk management professionals in financial institutions can look out for in the year 2018.
Consolidating internal risk intelligence: Financial institutions deal with huge amounts of data and this is expected to keep growing at an annual rate of 50 percent. These data include valuable information that is used across business functions as risk intelligence. The present legacy risk platforms are not well equipped to link this data to bring for the relevant intelligence for better decision-making. Moreover, it is manually driven which leads to loss of important insights. So, in the coming year, banks and financial institutions will be looking for a better solution that is complete and well connected to manage compliance mandates, minimize enterprise risk and strengthen internal audit. This will help them to be ahead of your competitors in terms of innovation, time to market, user delight, fast changing market landscape and regulatory challenges.
Better external risk and regulatory intelligence: According to a Thomson Reuters study, the rate of regulatory activity is continuing to grow. The study revealed that 70 percent firms anticipate regulators to roll out more updates in 2018. Banks are struggling with regulatory changes and there is an increasing pressure to keep a tab on external risk intelligence. In 2018, banks will look to leveraging accurate sources of risk and regulatory intelligence to meet regulatory obligations and make informed decisions.
Security of critical data: 2017 was the year of data breaches. Malware and ransomware attacks are on the increase. A minor oversight in technology can lead to data breach. In 2018, data security will be an even bigger challenge and financial institutions will have to focus on effective security measures to avoid reputation loss and damaging the brand.
Preventing trade-based money laundering and watching out for terror financing: In 2018, financial institutions must identify trade-based money laundering, an activity that may increase. Preventing the use of trade finance route to help terror financing is the biggest priority for banks. Identifying illicit flow of money requires real time tracking of over and under invoicing, and any other fraudulent activity. A digitized approach for trade finance compliance and proper diligence will ensure that only high-quality transactions flow through seamlessly, and make sure that suspicious transactions are reported.
With the possibility of new and more powerful cyber threats and other risks, financial institutions including banks will have to focus on implementing the best risk management strategies, technologies, and embracing competencies such as mastery over data, consistency of data, standardization, proper inflow of information, and so on.