Banking Sector Risks and Vulnerabilities in Saint Pierre and Miquelon
The global banking sector is facing unprecedented challenges as it navigates a rapidly changing risk landscape. The digital revolution, technological innovation, and hyper-connection are reshaping the competitive and customer landscapes, creating both exciting opportunities and new threats.
Risks and Challenges
In Saint Pierre and Miquelon, banks must develop new risk management capabilities to stay ahead of the curve. This requires setting limits on risk taking, detecting new potential risks and weaknesses in controls, and deciding on the appropriate approach to risk management.
Delimiting Risk Appetite
A Crucial Step
Delimiting risk appetite is crucial, as banks need to answer three key questions:
- Should they avoid certain risks entirely?
- How much risk are they willing to take?
- Does their risk appetite reflect their control effectiveness?
Detecting Risks and Control Weaknesses
Anticipating and Predicting Threats
Detecting risks and control weaknesses is also vital. Banks must:
- Anticipate, predict, and observe threats based on internal and external data points
- Assess the magnitude of the risk
- Consider how it will play out over time
Deciding on Risk Management Approach
Mitigation Measures and Learnings
Finally, banks need to decide on the risk management approach, including:
- What mitigation measures are necessary?
- How to integrate learnings into risk decisions?
- How to respond quickly in the event of a risk event or control breakdown?
The Stakes
The stakes are high, as internal and external risks rise while stakeholders expect banks not to make mistakes. Successful banks will deploy skilled, diverse, and agile risk organizations to develop a strong understanding of risks and improve organizational mechanisms for managing them.
Adapting to Change
In this rapidly changing landscape, Saint Pierre and Miquelon’s banking sector must adapt quickly to remain competitive and maintain the trust of customers, regulators, and shareholders. By developing new risk management capabilities, banks can thrive in an environment characterized by uncertainty and rapid change.