A ‘single source of truth’ for risk management within Financial Services institutions

Sword GRC Blog

A ‘single source of truth’ for risk management within Financial Services institutions

A ‘SINGLE SOURCE OF TRUTH’ FOR RISK MANAGEMENT WITHIN FINANCIAL SERVICES INSTITUTIONS

The 12th edition of Deloitte’s Global Risk Management Survey was completed by 57 financial organizations across the world from March to September 2020, at a time of tumultuous change and challenge wrought by the first sixth months of the pandemic.

As an assessment of the financial services industry’s risk management challenges and practices, the survey revealed that most respondents considered their institutions to be extremely or very effective at managing risks. Fewer however felt so confident about managing the non-financial risks that were catalysed or brought to the forefront with the Covid crisis.

Trends emerging from the survey findings included:

Greater focus on credit risk
One in five (20 per cent) survey respondents cited credit risk as the top type of risk that will increase most in importance over the next two years – compared to only 3% of respondents indicating credit risk in the previous survey of 2018.

Continuing concerns over cyber security
Cyber security took second place in the top three risks that will increase most in importance over the next two years category, with only 61 per cent indicating that their organizations are very or extremely effective at cyber security risk management. 87 per cent said that improving cyber security risk management will be a very or extremely high priority over the next two years.

Environmental, social and governance (ESG) risks
ESG risk was cited most often amongst respondents top three answers for risks that will increase most in importance over the next two years. 33 per cent indicated that their organizations are extremely or very effective at ESG risk management.

Non-financial risk management less ineffective
Only 65 per cent of respondents rated their firms very or extremely effective at non-financial risk management, whereas financial risk management was considered very or extremely effective.

Prioritising third party risk
Third party risk management – encompassing issues such as data privacy, business continuity, unethical conduct – emerged as a major challenge. 44 per cent of institutions rated their third part risk management very or extremely effective. 64 per cent indicated that they would prioritize third party risk management over the next two years (as a very or extremely high priority).

Turning to technology
30 per cent of respondents said that emerging technologies are being employed in order to help drive down costs via automation, minimise errors, bolster controls and enable the timely identification of potential risk events.

In the blog post entitled ‘Deloitte Releases Global Risk Management Survey’* it is suggested that: ‘Successfully using these technologies as part of a risk management technology infrastructure requires the presence of comprehensive, up-to-date and high-quality risk data – and creating such a “single source of the truth” for risk can be a challenging undertaking. To that end, 49 percent of survey respondents said they were very or extremely concerned about risk data quality and management, and 69 percent said that enhancing the quality, availability and timeliness of risk data will be an extremely or very high priority over the next two years.’

Addressing the risk management challenge through technology
“The Deloitte Global Risk Management Survey results point to a growing requirement for quality, reliable data,” says Jenny Ritson-Smith of Sword GRC. “Trustworthy data is the bedrock for effective risk and compliance mitigation, informing decision-making.

“Sword GRC is committed to supporting its customers today, in the aftermath of the pandemic, and in their ongoing risk management and GRC best practice, as the landscape continues to evolve.”

Discover how Sword Operational Risk Manager delivers the critical ‘single source of truth’ that can help financial institutions to streamline the risk management process, track key metrics, reduce costs and mitigate risk exposure.

* Deloitte Releases Global Risk Management Survey