Approaching menace: how financial firms are tackling emerging risks
Change is constant but, in the past few years – amid the Covid‑19 pandemic, geopolitical conflicts, climate change and various other crises – financial firms have faced an era-defining range of new scenarios and unprecedented events.
Conducted in summer 2023, this Risk.net survey sponsored by Riskonnect sought to assess the nature of emerging risks, how well firms can assimilate emerging risks within existing risk management frameworks, and the extent to which technology and automation can help firms develop more effective processes to take a more proactive approach to managing and mitigating risk.
Among the findings, a ‘fast-moving environment’ was cited as the most challenging aspect of managing risks, such as inflation, interest rates and cyber, with ‘improved monitoring’ and ‘upgraded IT systems’ being the most common actions taken in responding to emerging risks.
As a risk specialist for a major bank noted: “Automation and the ability to process data is key. But you have to connect the dots. You can have all the systems, but you have to have human insight on top of that.”
Worryingly, some 18% of the 100 respondents said they were ‘not confident’ their firm had a holistic view of risk across the business, with a further 58% only ‘fairly confident’.
Firms will need to work fast to plug the gaps in their existing frameworks and processes if they are to tackle the emerging risks of tomorrow.