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Banks Must Address Non-Financial Risks to Stay Ahead
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As the regulatory landscape continues to evolve, banks are facing a growing array of non-financial risks that threaten their stability and reputation. A recent survey by Boston Consulting Group reveals that rising regulatory scrutiny and requirements have led to an increase in compliance headcount across the industry.
The Rise of Non-Financial Risks
Non-financial risks are increasingly becoming a major concern for banks. According to the study, five key topics will shape the compliance landscape over the next three years:
- Efficiency
- Data availability
- Regulatory changes
- Availability of qualified employees
- Comprehensive risk assessment and oversight
Addressing Non-Financial Risks
To address these risks, banks must prioritize pressure testing their compliance programs, introducing agile ways of working, and staying ahead of the industry curve by tackling hot topics. The study found that banks with a greater level of digital maturity rate themselves higher across almost all dimensions of the operating model, highlighting the importance of embracing digitization in compliance.
Integration of Compliance into an End-to-End Agile Setup
The integration of compliance into an end-to-end agile setup can help the function gain speed and efficiency while maintaining effectiveness and independence. Compliance controls must also be improved to address emerging risks.
Key Takeaways for Banks
The survey’s findings provide clear pointers for banks looking to future-proof their compliance functions:
- Pressure test your current compliance programs regularly
- Introduce agile ways of working into your compliance processes
- Stay ahead of the industry curve by tackling hot topics
- Emphasize efficiency, data availability, regulatory changes, and comprehensive risk assessment and oversight
Conclusion
By addressing these non-financial risks, banks can ensure they remain competitive and compliant in an increasingly complex regulatory environment.
About Boston Consulting Group
Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. With a diverse global team of experts, BCG delivers solutions through leading-edge management consulting, technology, and design, and corporate and digital ventures. For more information, please visit bcg.com.