BERMUDA FINANCIAL INSTITUTIONS FACE HEIGHTENED RISK MANAGEMENT EXPECTATIONS
A New Era of Discipline and Accountability
In response to past corporate failures, financial institutions in Bermuda are being urged to demonstrate better discipline, control, and responsibility. The era of lax governance, risk, and compliance programs is behind us, with regulators and stakeholders now demanding greater accountability and transparency.
Risk Management: The Key to Survival
Risk management has never been more critical for financial institutions. To mitigate potential risks, companies must continually scrutinize their:
- Capital reserves
- Credit portfolios
- Investment policies
- Capital and debt profiles
Moreover, financial institutions must remain vigilant about the threats posed by suppliers, whose default or business collapse can have devastating financial and reputational consequences for connected parties.
Fraud Risks: A Growing Concern
When cash is tight, fraud risks become a significant concern. Employees may become more opportunistic, while external hackers may exploit weaknesses in a company’s defenses. To deter fraud attempts, financial institutions must ensure their systems and policies are robust.
Litigation: The New Reality
The trend towards litigation for losses that would previously have been absorbed is likely to continue. Companies will seek to apportion blame to other parties for inappropriate or negligent behavior resulting in financial or business loss. This could lead to costly legal battles as either plaintiffs or defendants.
Internal Audit and Chief Risk Officers: The New Frontline
In response to these challenges, internal audit functions are increasingly being tasked with:
- Regularly reviewing the risk profile for emerging risks
- Identifying trends and anomalies
Chief risk officers are becoming more involved in strategic decision-making, where risk is given equal weight to growth considerations.
Expert Guidance: KPMG’s Value Proposition
To fortify their businesses against these challenges, financial institutions in Bermuda can seek expert guidance from professionals at KPMG. With extensive experience in helping companies navigate complex regulatory environments and mitigate risks, the KPMG firms offer a valuable resource for those seeking to stay on track and ensure the long-term survival of their business.