23 Jul Financial Service Risks That Require a Powerful Risk Assessment Platform
Financial Service Risk
Over the last several years, the financial services industry has been hurdled with scandals and loss. Said scandals have cost financial companies millions of dollars and left them with a not so good look. Financial service risks are getting out of hand, so I’m going to talk about the highest risks in the financial services industry, and how they can be avoided, or at the least, managed.
Probably the most well-known financial service risk is cyber risk. Cyber risk is the risk of a cloud system being hacked or leaked. The financial services industry suffered 65% more cyber-attacks in 2016 than any other industry. Accounting for major loss of data and in some cases money, cyber risk is both a reputational risk and a financial risk for banks and other financial sectors.
Regulatory risk is rising high as our technology continues to rapidly increase. More and more regulations from agencies like FFIEC, NCUA, and CFPB are being put in place in attempt to protect identities, data and assets. Regulations are becoming more complex and require more management attention—and much more investment and resources—for an appropriate response. It is becoming increasingly clear that the historical approach to dealing with regulation will not work. The risk of not complying with mandatory regulations can result in many consequences, most commonly fines.
Market risk is the risk of loss due to changes in the market. Equity prices, interest rates, foreign exchange rates, taxes, etc. Doing business in multiple geographical locations increase this risk, as different political markets come into the picture.
Credit risk is the risk of a borrower not paying a financer back. Usually, to avoid this, banks will charge higher interest on loans, etc. but sometimes that still doesn’t cut it. Or, sometimes the bank can lose track of the money due to human error or other unknown reasons.
A Powerful Solution
If financial organizations had proper risk management systems in place, they could avoid all these unwanted repercussions in the first place and wouldn’t have to budget millions to repair their reputations and regain customers trust again. With over 30 preloaded regulations and standards, our risk assessment solution, SecureWatch provides support for all your cyber and regulatory financial service risks.