Top Risk & Compliance Insights of 2023
- December 14, 2023
- Quantivate
Best of the Quantivate Blog
Revisit our most-read posts of the year in this roundup of risk and compliance news and best practices.
As your organization prepares for 2024, take stock of your GRC priorities and practices in areas like areas like regulatory compliance, third-party management, and risk assessment.
Regulators Propose Changes to Regulatory Capital Framework
Get an overview of proposed changes to capital requirements for large banks issued in July by the OCC, FDIC, and Federal Reserve, ahead of the final ruling expected in 2025.
“The proposal is unlikely to be finalized as-is because of concerns raised by members of the agencies about deviation from the Basel III endgame standards, along with the industry-wide pushback on the proposal. Many industry groups opposed to the proposal argue that an increase in capital requirements isn’t necessary and is likely to harm the economy and competitiveness of the U.S. banking industry.”
Silicon Valley Bank: Risk Management Missteps Explained
The banking crisis this past spring had many financial institutions reevaluating their governance and risk management practices. Take a look back on where it all began by dissecting Silicon Valley Bank’s mismanagement of concentration risk, liquidity risk, interest rate risk, and overall lack of risk governance in this analysis of what went wrong.
“Poor risk governance and management, including an eight-month gap when the bank didn’t have a chief risk officer, proved disastrous for Silicon Valley Bank. ‘In the case of SVB,’ GARP sums up, ‘the bank’s ultimate demise was fueled by [an] unusual confluence of events: over-concentration in a volatile sector, and poor investment strategy, risk management practices and board risk oversight.’”
Third-Party Risk Management in the Spotlight
Third-party risk management continues to be a priority in the financial services industry for both institutions and regulators. Review takeaways from the finalized guidance issued in June by the Federal Reserve, FDIC, and OCC.
“The topic of third-party risk management has grown exponentially over the past few years due to changes in the financial services industry, including financial institutions partnering with fintech providers and the explosion of artificial intelligence used in many third-party systems. Combine this with ever-increasing regulatory requirements pertaining to technology, cybersecurity, consumer compliance, anti-money laundering, sanctions, and fraud, and you have a very complex situation that requires robust risk management processes.”
Regulators Crack Down on Compliance in Financial Services
The costs of non-compliance are soaring in the financial services industry. Learn about enforcement areas to watch from some of the biggest regulatory penalties handed down in the banking and cryptocurrency sectors.
“A look at recent headlines reveals both the prevalence of regulatory enforcement actions and the high costs of non-compliance. A recent analysis of 1,500 news reports related to bank risk events found that more than 600 referenced governance failings. Nearly half of those spotlighted regulatory fines.”
Compliance FAQ: Which risks need an annual assessment?
Explore considerations for developing risk assessment processes that meet regulatory requirements and guidance for financial institutions.
“Because risk assessments are so important to examiners, and because it’s difficult for management to document their understanding of risks without performing a written assessment, consistent processes based on your institution’s risk profile are key.”
According to recent research on risk transformation in financial services, factors like this year’s banking crises and increased regulatory focus on operational resilience have leaders focusing on improving risk management through digitization and technology investment.
Digitizing risk functions can help overcome the “slow and inflexible GRC systems, highly manual processes, and deeply siloed operations” that prevent institutions from effectively responding to incidents and disruptions.
With 2024 and all its unknowns just around the corner, preparing for uncertainty and the risk and compliance challenges that come with it is both a necessity and a strategic advantage.
Learn more about how Quantivate helps financial services organizations build a cohesive and scalable approach to GRC management.