On the one hand the fast evolving field of technology and on the other, risk management and compliance. How these functions are brought together and managed can create strategic advantages. The evolution of banking Looking back at banking in the 1980’s, banks were focused mostly on taking deposits and making loans provided through a branch network emphasising face to face contact with customers. These customers were not sophisticated and trusted their bankers to act in their best interest. With the dramatic advancement in technology though the 1990’s and ...
Risk management
Understanding Governance, Risk Management, and Compliance
What is the difference between Governance, Risk Management, and Compliance? They have become an accepted terms that describe similar related actions and procedures by an organisation. The three terms are closely related, and are increasingly integrated and aligned by business wherever it is practically possible so as to avoid conflicts, wastefulness and gaps. Organisations typically interpret the three terms differently. Differences in interpretation also occur across divergent international jurisdictions. Generally, the terms typically relate to activities such as ...
What is liquidity risk management?
At the onset of the financial market crisis in 2007, many banks had adequate capital levels but they still ended up experiencing serious difficulties when it came to liquidity risk management. They had failed to sufficiently accounted for their exposure to liquidity risk. Before the crisis, funding was readily available and cheap. This created the impression that markets were safe and that liquidity for funding purposes would always be plentiful and available. However, the uncertainty that the financial market crisis had created rapidly caused cheap funding that ...
Systemic risk in financial markets
Introduction The International Monetary Fund (“IMF”) has summarised the causes of the global financial crisis in three dimensions: Set out below is an analysis of these dimensions and a review of systemic risk, including what steps Regulators can take to mitigate the effect of systemic risk. 1. Flaws in financial regulation and supervision What has become known as the “shadow banking system” became larger as it was wedged in among lightly regulated financial services businesses such as Investment Banks and Mortgage Originators. At the time traditional financial ...
Positioning technology, risk management and compliance
Certain facets of business if brought together effectively and managed well, can create an environment of strategic advantage. The evolution of banking: Looking back at banking in the 1980’s, banks were focused primarily on taking deposits and making loans that were delivered via a branch emphasising face to face contact with customers. These customers were relatively unsophisticated and trusted their bankers to act in their best interest. With dramatic advancements in technology, banking customers became increasingly sophisticated, demanding an ever increasing variety of ...