Risk EMEA, finance risk & regulation: Key areas of focus for 2018

Risk EMEA, finance risk & regulation: Key areas of focus for 2018

By Shannon Harris, Senior Research Executive, CeFPro. 

Modern day risk is becoming increasingly challenging and those within the financial sector face constant change and adaption in order to mitigate against crisis. In order to gain precise insight into risk management across FI’s we spoke to over 60 senior industry professionals from multiple disciplines and jurisdictions. Connecting with several CROs, Global Heads, MDs and more provided new viewpoints and offered a glimpse into real life challenges and opportunities for risk professionals. The feedback from these various interactions was then collated and reviewed to shape our highly anticipated 7th Annual Risk EMEA, Financial Risk & Regulation Summit 2018.

In the year since our last Risk EMEA Summit it is evident that the industry has progressed significantly from an innovation, regulatory and priority standpoint. In only 12 months the risk landscape has evolved dramatically due to changes in regulation, industry developments and variations across jurisdictions. One of the clearer areas was the move away from focus towards FRTB and disparities in approaches on how to tackle uncertainties with how to proceed. This is a perfect example of steady change, with the release of Basel guidance highlighting expectations for institutions, changing the landscape even in the last month. Many institutions throughout the research were unsure how best to proceed, with timelines and requirement goalposts changing for FRTB implementation, many were unsure whether to proceed with preparation or hold out until the landscape become more certain.

In particular when speaking to leading CROs two clear themes for the 2018 congress were evident, firstly the impact of multiple regulations, and managing regional discrepancies. Due to the events of the financial crisis the financial sector is now heavily regulated to mitigate against future downturn. This regulation creates multiple challenges in the cost of compliance, integration with business models and achieving global compliance and harmony. The second challenge was managing uncertain political risk and impacts post Brexit. Several questions are still yet to be answered regarding Brexit and at this stage the impact of leaving the EU is still very much unknown. Over the next twelve months, the industry eagerly anticipates news and further detail on how those operating across multiple jurisdictions will be affected by Brexit. In order to gain senior industry perspective and insight these particular keynote discussions have been exclusively reserved for leading CRO’s from across the financial sector. This structure will offer high level input from some of the industry’s leading profesionals to pose questions and debate around what the future could hold.

Our research also highlighted how other areas have increased in importance, for example innovation within finance is rapidly becoming one of the top items on many risk professionals agendas. In the recent history technological advances have arguably made the financial industry unrecognisable and allowed for incredible achievements. However this new technological era has also created equal amounts of opportunities and challenges, and it’s the role of many risk professionals to stay on top of this constant change. For the upcoming 7th Annual Risk EMEA Summit, innovation in risk management was a new area of exploration and we wanted to ensure the most current and critical challenges and opportunities were explored. Therefore our research dived into new areas surrounding innovation and lead us to connect with those leading the charge to combine technology and risk management. The various studies and interviews highlighted the most pressing areas relating to risk management and innovation, just some of the main areas included big data, advanced analytics, cyber security, FinTech, payments, AI and cloud computing. These areas which were once preserved as future technologies are now very much a reality, whilst many push for increased advances, it is once again the job of risk professionals to evaluate new innovation from every possible angle and the potential impacts on the business. Due to the magnitude of this topic demand called for us to include a whole stream dedicated to innovation in risk management. This would allow for risk professionals to discuss, collaborate and share ideas on the progress of innovation and how it impacts the risk landscape.

Additionally traditional topics such as capital management have also broadened in perspective and scope. Capital management continues to be a critical area of focus, keeping on top of continued regulation and industry developments can be a challenge. However research suggested a new trend towards alignment of capital and other areas, particularly liquidity to gain a better overview the balance sheet and ultimately balance sheet management. Balance sheet management aligns topics from capital and liquidity, IFRS 9 and Recovery & Resolution Planning. This flexible format would allow for a focus on long standing capital management areas such as stress testing, ring fencing, TRIM, and regulatory change but also leaving room for further industry discussion.

And finally 2018 is set to be an exciting year for the credit risk space, research suggested that credit risk is still a vital area of focus for many risk professionals. In particular the upcoming twelve months are set to be exceptionally important as many will see years of hard work transformed into the final implementation and go-live of IFRS 9. Arguably this is a momentous period as we enter the new phase of IFRS 9, and many industry professionals have been left to wonder what the industry may look like post implementation. Research also suggested that a focus on Brexit is rising in importance for credit risk professionals, with so much political uncertainty it is currently unknown how Brexit will impact the macroeconomic environment and credit portfolios. At this stage of development it will be interesting to observe how firms working across multiple jurisdictions are dealing with this uncertainty and possible future outcomes. In addition to these issues other areas within credit risk have also been highlighted as key themes for 2018, these include IRRBB, LGD, Low yield environment and IRB models.

Our extensive research produced several key topics and allowed for an insight into the everyday achievements and struggles faced by risk professionals across EMEA. The findings of our study highly contributed to the production 7th Annual Risk EMEA: Financial Risk & Regulation Summit taking place on the 24-25 April in London. We have developed an extensive agenda with areas dedicated to CRO discussions, innovation in risk management, balance sheet management and credit risk. With a highly colourful agenda the summit attracted over 60 senior presenters from across the industry and is anticipated to be attended by over 300 participants. For more information on the upcoming initiative including the agenda, speaker line up and registration details please visit www.risk-emea.com.