Financial Crime World

Here is the converted article in markdown format:

Financial Institutions Face Significant Risks Amid Shifting Landscape

The financial sector is facing a myriad of risks as it navigates the ever-changing regulatory and economic landscape. A recent survey by Aon has identified the top 10 risks that financial institutions are likely to face, including cyber attacks, regulatory changes, talent shortages, and economic slowdowns.

Legacy Software and System Outages

One of the most significant concerns is the use of legacy or unsupported software, which can put financial institutions at risk of system outages and consequential losses. According to the survey, a quarter of financial institutions have suffered a loss due to these risks in the past 12 months, while 60% have plans in place to respond to them.

Digital Assets and AI Risks

The rapid evolution of digital assets and AI use in the absence of prior experience and regulation is also exposing financial institutions to significant losses. The lack of talent to address these risks could lead to failures to innovate or meet customer needs, ultimately impacting business performance.

Rising Risks

  • Failure to attract or retain top talent has risen to number eight on the list of current risks.
  • Tech or system failure is expected to rise to third place as a future risk. This highlights the need for financial institutions to prioritize digital transformation and upskill their existing workforce to address these emerging threats.

Cyber Risks

The survey also revealed that only 12% of financial institutions have quantified their cyber exposure, despite it being the industry’s most critical risk both now and in the future.

Mitigating Risks Effectively

To mitigate these risks effectively, financial institutions must adopt a holistic approach that views cyber risks as an organization-wide exposure. This requires investments in:

  • Training
  • Communication
  • Reskilling to ensure employees are equipped to address emerging threats.
  • Integrating loss quantification, scenario analysis, and insurance optimization across top operational risks.

Conclusion

The financial sector is facing a complex and rapidly evolving landscape of risks that require a proactive and holistic approach to mitigation. By prioritizing digital transformation, upskilling their workforce, and adopting a comprehensive risk management strategy, financial institutions can mitigate these risks and ensure long-term business success.

Product/Service Offerings

Aon offers a range of products and services designed to help financial institutions manage and mitigate emerging risks, including:

  • Captive Insurance
  • Cyber Insurance
  • Errors and Omissions Liability Insurance
  • Climate Risk Consulting