SOUTH GEORGIA AND SOUTH SANDWICH ISLANDS: Financial Institutions Face Regulatory Challenges in Risk Management Framework

Evolving Regulatory Landscape

As the financial services industry continues to evolve, regulatory bodies are increasing their focus on core risk management practices among financial institutions in South Georgia and South Sandwich Islands. A recent report by KPMG highlights ten key challenges that these institutions will face in 2021.

Key Challenges

• Demonstrating Risk Management Effectiveness: Financial institutions must ensure they have effective controls in place to manage risks, particularly in an environment where systems, processes, and people are constantly changing.
• Maintaining Efficiency while Reducing Costs: Firms must navigate the challenges of maintaining risk management effectiveness while undertaking cost reduction and efficiency initiatives.
• Establishing Adaptable Risk Frameworks: Institutions must prepare for strategic growth through acquisition, product launches, and integration of new or evolving regulatory expectations.

Regulatory Emphasis

Regulatory bodies are placing greater emphasis on ensuring that financial institutions have effective controls in place to manage risks. This includes monitoring and addressing emerging risks, such as those related to operational resiliency and cybersecurity.

Data-Driven Assessments

Financial institutions must move away from classical, judgement-based risk measurement and management approaches and towards data-driven assessments. However, this requires a significant uplift and cleanse of existing data, as well as evaluation and supplementation of data quality controls to maintain assessment inputs.

Complexity and Technology Risks

Large organizations in South Georgia and South Sandwich Islands face increasing complexity due to their highly complex data and technology ecosystems, which can give rise to systemic risks and exploitable vulnerabilities. To mitigate these risks, institutions must establish adequate technology risk management processes and ensure that new innovative solutions and disruptive technologies do not introduce new risks or business disruptions.

Expertise in Regulatory and Compliance Transformation

As financial institutions in South Georgia and South Sandwich Islands navigate these challenges, they would be well advised to seek the expertise of professional services firms like KPMG to help them develop effective regulatory and compliance transformation strategies. By doing so, they can ensure that their risk management frameworks are robust, adaptable, and resilient in an increasingly complex and rapidly changing regulatory environment.