Risk Management Outlook 2014: Trends, Tensions, and Transformations in the Value Chain
Abstract
Point-based risk and regulatory optimization efforts will need to go beyond one-off project efforts. Efforts must transition to a state where coordinated optimization across the ecosystem’s chain of activities can be done on a business-as-usual basis.
In the report Risk Management Outlook 2014: Trends, Tensions and Transformations in the Value Chain, Celent examines the current state of risk and regulatory initiatives and ongoing pressure points, and provides pointers to navigating the journey ahead.
The industry is at the halfway mark in delivering initiatives to mitigate cost impact and complexities in the new market environment. Despite best efforts to harmonize, coordinate, and standardize supervisory requirements, Celent believes that regulatory fragmentation is likely to be an immediate feature of the new environment.
Firms will need to be smarter in understanding and triangulating the drivers of the profitability and cost equation. Beyond current efforts, firms will need to focus on enhancing both strategic and operational levers to mitigate the potentially corrosive effects from the structural changes. In this regard, opportunities and threats in the financial services industry are inextricably tied to risk practices and technology infrastructure. Strategic investments in driving cultural, operational, and technology changes will be key determinants to successful execution.
“The outlook can be attractive if firms play their cards right, but detrimental if response initiatives are not executed cohesively,” says Cubillas Ding, Research Director with Celent’s Securities & Investments Group and author of the report. “Looking forward, we anticipate tougher choices and heavier lifting.”
This report evaluates where the industry stands with risk and regulatory initiatives and explores the emerging outlook, trends, and potential transformations that financial firms should emphasize. We provide five action levers that firms have to master to play for the long haul, and examine instances of Tier 1 financial institutions in their quest to navigate emerging opportunities.