Technology and Risk Management

Technology and Risk Management

 

With so much more data to manage, what are the main emerging technologies impacting risk management in the Financial Services industry?

PWC has identified Ten Competitive Technology Driven influencers for 2020:

 - FinTech will drive the new business model

 - The sharing economy will be embedded in every part of the financial system

 - Blockchain will shake things up

 - Digital becomes mainstream

  - Customer intelligence’ will be the most important predictor of   revenue growth and profitability

- Advances in robotics and AI will start a wave of ‘re-shoring’ and localisation

 - The public cloud will become the dominant infrastructure model

- Cyber-security will be one of the top risks facing financial institutions

- Asia will emerge as a key centre of technology-driven innovation

- Regulators will turn to technology as well

What are the benefits of these transformative new technologies?

By leveraging these new technologies, financial institutions gain the tools needed to store, ingest and better analyse data from a variety of sources. This provides a competitive advantage.

What are the risks associated with utilising emerging technology in risk management in the financial services industry?

New and bold technologies are opening up the world of data and intelligence. With this however, comes increased disruption and possible destruction such as cyber crime. Now more than ever better governance and management of these emerging technologies is key. 

How is governance achieved in a risk environment?

Financial institutions are already looking to govern and redefine their risk management platforms. Regulations such as Fundamental Review of the Trading Book, or FRTB, are at the root of some of the most wide-sweeping risk reforms in recent history.

In addition, thinking holistically rather than atomistically about how to use advanced technologies such as AI and machine learning, will lead to the development of end-to-end risk management platforms

 Employing a skilled workforce will be essential to survival during this time. What qualities should an organisation look for when hiring Technology Risk experts?

Having a diverse workplace has never been more important. It is vital to have diverse and flexible teams (both men and women) who are skilled and not afraid to challenge the status quo. Risk employees must continue to upskill, reinvent and relearn even without a primary technology background. Employees should find new and emerging technology elements that specifically interest them and specialise accordingly to add value to their organisation. Above everything else, employees should have a thorough understanding of the business and it’s value chain.

 Jump on board for the ride..

Financial institutions have a lot on their plate: emerging competitors, shifting demographics, rising customer expectations and changing regulations and skill shortages. Technology offers solutions, allowing financial institutions to cut costs and become more efficient at what they do. But this is tricky, because it is a classic ‘limited time offer’. Most technology is not proprietary, so it is a bit of a race: if you blink, you might miss it and you can’t afford to do this – either now or in the future. It’s simply just too risky!

 Conclusion

In conclusion, financial institutions need transformative new technology  and a skilled workforce to address the ever-increasing complexity around managing data, associated risk and regulatory requirements. They do however need to be proactive, prepared and poised for what this might open them up to and how to maintain a safe, secure and competitive advantage.

 References

https://www.pwc.com/gx/en/financial-services/assets/pdf/technology2020-and-beyond.pdf

https://www2.deloitte.com/au/en/pages/financial-services/articles/fundamental-review-of-the-trading-book.html

https://www.cso.com.au/article/556587/cyber-crime-financial-institutions/

https://home.kpmg/au/en/home/insights/2018/04/technology-risk-disruption-is-new-norm.html

 

 

 

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