Financial Crime World

Risk Management Strategies for Canadian Financial Institutions Critical in Uncertain Times

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The Global Risk Institute’s (GRI) annual Risk Outlook report highlights the need for robust risk management strategies to mitigate economic and cyber risks facing Canada’s financial system.

Top Risks Facing Canadian Financial Institutions

According to a recent survey of leading financial institutions, the top four risks identified are:

  • Economic Risk: Stemming from the global pandemic, this is the number one concern for Canadian financial institutions.
  • Cyber Risk: Exacerbated by the shift to remote work, this risk follows closely behind economic risk.
  • Climate Change: A growing threat that requires attention and mitigation strategies.
  • Credit Risk: Round out the top four risks identified in the survey.

Impact of the Pandemic on Financial Institutions

The report reveals that a staggering 78% of respondents believe that a high-impact event based on these risks is likely to occur in 2021. However, all respondents expressed confidence in the ability of the Canadian financial system to withstand such events.

Quotes from Sonia Baxendale, President and CEO of GRI

  • “This year’s survey highlights the impact of the pandemic on the financial system… The continued slowdown of the economy and the threat posed by COVID-19 are top-of-mind for chief risk officers.”
  • “The survey shows that at a systemic level, there is high confidence in the resilience of the Canadian financial system. However, it’s crucial that financial institutions continue to prioritize risk management and operational resilience to mitigate these threats.”

Importance of Operational Resilience and Risk Management Strategies

By understanding the top risks facing their industry, Canadian financial institutions can better prepare themselves for potential disruptions. The survey underscores the importance of:

  • Operational Resilience: Ensuring business continuity in the face of disruptions.
  • Risk Management Strategies: Identifying, assessing, and mitigating risks to ensure continued stability.

Conclusion

In light of the findings, Canadian financial institutions are advised to prioritize risk management strategies that address economic, cyber, climate change, and credit risks. By doing so, they can ensure operational resilience and continued stability in an uncertain environment.