Luxembourg’s Financial Institutions Urged to Rethink Risk Management Strategies Amidst Regulatory Shifts and Emerging Technologies
As regulatory expectations continue to rise and innovative technologies disrupt the financial landscape, Luxembourg’s financial institutions are facing a critical challenge: adapt their risk management approaches or fall behind.
The Future of Risk Management
According to Deloitte Global’s recent report, the future of risk management will be dramatically different from what is currently in place. Financial institutions must rethink and adapt to new realities to become more dynamic and capable of responding to emerging trends.
Six Imperatives for a New Era of Risk Management
The report identifies six imperatives that financial institutions must consider:
- Increase focus on strategic risks such as geopolitical, FinTech, and non-traditional competitors
- Improve the identification and management of these risks
- Leverage emergent technologies to boost efficiency and effectiveness
- Enhance business unit responsibility for managing risks
- Clarify second line of defense activities
- Establish a formal conduct and culture program to build customer trust and gain a clear strategic advantage
Transforming Risk Management Strategies
To achieve this, financial institutions are urged to rethink their three lines of defense by:
- Enhancing business unit responsibility for managing risks
- Clarifying second line of defense activities
- Establishing a formal conduct and culture program
Additionally, they must:
- Build a more nimble infrastructure that can address newer non-financial risks as well as the challenges posed by regulatory fragmentation
- Manage capital and liquidity strategically by enhancing governance structures and decision-making processes
What’s at Stake?
As Luxembourg’s financial institutions navigate this critical juncture, they must decide whether to continue with business as usual or take a proactive approach to transform their risk management strategies. The report provides valuable insights and recommendations for those seeking to position themselves for success in this rapidly evolving landscape.
Get Involved
Financial institutions can read the full report online and contact Deloitte executives to discuss its findings and implications. Additionally, Deloitte’s experts are available to assess current risk management strategies and recommend best practices for transformation.