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Overview

Read this report to discover the risk management predictions given by MetricStream’s SVP, Industry Solutions, Brenda Boultwood.

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2017 Predictions

Compliance Management and Risk Management Will See Further Integration

Risks, both evolving (e.g. vendor risks) and emerging (e.g. cyber risks, model risks), and compliance will continue to complement each other, with one serving as a bellwether to the other and vice versa. This integration is steadfastly becoming the Holy Grail for organizations, as it brings together strategic objectives with regulatory prerogatives, and establishes a forward-looking, business-enabling approach to risk and compliance. In some cases, risk and compliance functions will be integrated at the organizational level. In other cases, a risk-based approach to compliance will dominate the methods for determining what is most important and where investment dollars should go.

Risk Regulations Will Continue to Evolve

With the political guard changing at some of the leading economies of the world, the regulatory landscape remains uncertain and is expected to continue to change rapidly. Organizations can expect direct changes (e.g. regulatory amendments) and indirect changes (e.g. re-negotiated trade agreements) in regulations across all risk profiles. With change as a constant, organizations will need to build or augment agility in their risk management programs without compromising on the robustness of the same. Regulations are difficult to reverse. We may see a temporary relaxation in enforcement which should cause uncertainty levels to rise.

Advanced Analytics to Enhance Sophistication in Risk-weighted Strategic Decisions

Disruptive changes in technological innovations will provide organizations with exponentially enhanced sophistication in risk-related data analytics capabilities. Big data, machine learning, and crowdsourcing can significantly enhance risk management programs with stronger computing power and improved predictive accuracy. Organizations will need to leverage such capabilities to enable the business lines to make risk-aware decisions (providing a competitive advantage) while optimizing the cost of risk management programs (providing an operational advantage). To cite an example, with the change in the focus of bank regulators from bespoke capital models to a more standardized model approach (SMA), there is a tremendous opportunity to direct analytics resources and efforts to where business decisions can be improved - Where should we invest to reduce operational losses? Which controls matter the most in mitigating risk? Which risks lead to the highest business returns?

Changing Customer Expectations Will Lead to New Risk Program Challenges

Customers expect an immersive, personalized, and instant response from organizations at all touch points. The growing influence of hyper-connectivity, coupled with the increasing number of startups gaining prominence with their disruptive business models (e.g. fintechs in financial services), are compelling organizations to be ultra-responsive to customers. Organizations will need to address a new set of risks emerging from highly customized solutions. They will need to protect customer interests and, more importantly, protect sensitive customer data. Customers also expect that their complaints will be dealt with fairly and systemically.

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