By any measure, 2020 was a year for the history books. The speed at which the world changed as the profound impact of the global COVID-19 pandemic was felt was truly unprecedented.
Equally unprecedented was the speed at which financial services firms and regulators responded to ensure that the associated risks to customers, employees, and the wider world were all identified, mitigated, and managed.
While 2020 was a year of crisis management, now 2021 is set to be a year of learning the lessons and re-assessing the how as well as the what for financial firms and their business activities. The firms that have navigated the pandemic best are those with highly skilled in-house risk and compliance functions. What is the good or better practice in the management of operational risks is not set out in black and white rulebooks but rather require often swift interpretation, reinterpretation, analysis, business-specific tailoring, and robust implementation to guarantee that all the practical ramifications — technological and otherwise — are appropriately handled and can be substantiated.
The detailed risks run by financial services firms are, by their very nature, firm-specific and unique, that said there are a series of high-level risks applicable to all firms, irrespective of geography or financial services sector. To that end, Thomson Reuters Regulatory Intelligence has published a new report, 5 Key Risks for Firms 2021, that assesses the main risks financial services firms are likely to encounter in 2021.
The continuing uncertainty around the pandemic and its impact puts even greater emphasis on the need for risk and compliance officers to be front and center in preparing their firms for any and all eventualities. The specific ramifications of geopolitical and other uncertainties can’t be planned for, of course, but many of the unduly damaging challenges can be mitigated. Indeed, the deployment of skilled resources together with a robust suite of tested policies and procedures can go a long way toward this mitigation.
You can download a copy of 5 Key Risks for Firms 2021 here, and watch author Susannah Hammond, senior regulatory intelligence expert at Thomson Reuters Regulatory Intelligence, discuss the important themes of the report here.
Further, the need for expert, knowledgeable senior managers, alongside highly skilled risk and compliance functions, now comes into even sharper focus, especially with the growing automation of business processes set against a backdrop of increasing personal accountability.
Financial firms also should be aware that regulators around the world intend to conduct post-pandemic reviews and firms would be best served if they have done the same. As a matter of course, firms should expect to share the results of any internal review work with relevant regulators. Any business-wide review is resource-heavy, particularly for the risk and compliance functions (often because those functions are seen to have risen to prior challenges), but as post-pandemic budgets are undoubtedly going to be squeezed, these critical functions need to remain appropriately resourced in order to help their firms thrive into the new year and beyond.
You can also listen to Thomson Reuters Regulatory Intelligence’s new podcast, “Compliance Clarified”, available on Apple, Spotify, and Google.
You can find more information on Thomson Reuters Regulatory Intelligence here.
