All firms are exposed to risk in various ways, and for businesses operating internationally, these risks become increasingly difficult to manage.
Managing regulatory risk is particularly challenging for businesses, especially banks who are custodians of public funds, as it encompasses a wide range of risks.
So, what is regulatory risk? Investopedia defines Regulatory Risk as the risk to a firm that a change in laws and regulations will materially impact a security, business, sector or market.
This means that changing or introducing a law or regulation by a government or regulatory body can lead to increased operating costs for businesses, reduced investment attractiveness, and even shifts in the competitive landscape.
Banks are known to be highly regulated and particularly since the 2008 Financial Market Crisis. Undoubtably banks are significantly exposed to Regulatory Risk.
Reforms to how banks will become regulated are intended to promote a more resilient banking sector and to improve the sector’s ability to absorb shocks arising from financial stress. It is difficult to accurately quantify how ongoing reforms such as these will change financial services offered by banks in the long-run. This is the role that managing regulatory risk will fill.
At Regulatory-Risk.com you will discover what some of these regulatory risks are, their impact, on business and how they can be managed.