While risk management has been around for a long time, it is only in recent times, particularly in the aftermath of 2008 financial crisis, that it has emerged as a central topic of interest for banks, regulatory bodies, and the wider public. As the banking industry has grown in complexity, so have the types of risk that banks are exposed to, and correspondingly, tools and techniques for risk management have expanded in sophistication.

Whereas once banks may have been content to marginalize risk in favour of short-term profitability concerns, stakeholders increasingly realize that risk management must be a core driver of a bank’s business. The potential costs of lapses in this area are now so great that cutting corners no longer makes business sense.

In a previous report titled: “Risk Management – Looking Beyond the Transactions, Credit Leading the Way”, we introduced the various categories of risk and discussed how banks make sourcing decisions about risk management. We focused on the large category of credit risk management, and discussed, among other topics, the evolution of credit risk activities over time as well as the role of automation and analytics in credit risk management.

In this report, we focus on three categories of risk management – market, liquidity, and regulatory risk management, as well as the global sourcing landscape for them. We discuss:

• The nuances that make the sourcing landscape for liquidity and market risk differ
• The growing complexity of regulatory filings
• Some of the major regulatory fines post-2008 and why they were levied
• How banks should respond to a new regulation
• The way forward for market, liquidity, and regulatory risk management

Membership (s)

Banking and Financial Services (BFS) - Business Process Outsourcing (BPO)