Risk Outlook for Banking: Calmer Times

by Joan McGowan, June 21, 2016
Industry Trends
Global

Abstract

2016 will see continued focus on cyber-security and compliance management, and the emergence of digital risk as a top concern for the regulators and, therefore, the banks.

Celent’s report Risk Outlook for Banking: Calmer Times identifies the top risk management concerns and trends facing the banking industry. Celent believes it is the year banks will get to grips with management of cyber-security and take control of how cyber-crime is perceived in the banking industry. Banks will employ Regtech to become much smarter in their management of exhaustive compliance obligations, and will be in a position to influence the regulators as they begin to adapt regulations for digital distribution risks.

Celent predicts what will happen in banking risk management and warns banks what must happen.

“Banks are taking tighter control of risk issues by streamlining and operationalizing processes and controls across all risk types. That includes treating cyber-security as a form of operational risk,” says Joan McGowan, senior analyst with Celent’s Banking practice and author of the report. “Fundamental to their success is improved data quality, access to more pertinent data, data insights, and data sharing. The technology enablers are there; banks just need to be wise in how they invest and resource risk management.”

This 34-page report contains seven figures and three tables.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is part of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

Top Trends in Banking Risk Management

2

Trend 1: Cyber-Security Controlled as a Variant of Operational Risk

4

 

Cyber-Security Another Form of Operational Risk

4

Trend 2: Look to Regtech to Embrace Regulations

8

 

Emerging Themes in Regtech

8

 

Cyber-Security Compliance

10

 

Credit Risk Back to the Front

11

 

Increased Attention to Management of IRRBB

12

 

Liquidity at Risk

12

 

Keeping an Eye on Conduct

12

 

Governance Risk and Succession Planning

14

Trend 3: Data and Analytics Enable Proactive Risk Management

15

Trend 4: Pursuit of Improved Margins Reignites Credit Risk Concerns

19

Trend 5: Risk Professionals Take Control and Provide Assurance

22

 

Defining Roles and Responsibilities

22

Trend 6: Change the Hawkish Tone of the Debate

25

Trend 7: Openness Is the Best Defense

26

Trend 8: Adapt Risk Management for Digital Distribution

28

Appendix

30

 

Risk Definitions

30

Leveraging Celent’s Expertise

32

 

Support for Financial Institutions

32

 

Support for Vendors

32

Related Celent Research

33

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