Financial Crime World

Risk Management Strategies for Financial Institutions in Canada: Staying Ahead of the Curve

As Canadian financial institutions (FIs) navigate the ever-changing landscape of innovation, talent, and regulatory change, effective risk management strategies are more crucial than ever. In this article, we’ll explore seven key regulatory trends that will shape the industry in 2018 and provide insights on how to stay ahead of the curve.

Financial Risk Management

The Fundamental Review of Trading Book (FRTB), International Financial Reporting Standard 17 (IFRS 17), and model risk are significant regulations pending for Canadian FIs. To manage these areas effectively, FIs will need to leverage advanced technology and enhanced governance frameworks.

  • Advanced technology: Leverage innovative tools such as robotic process automation, machine learning, and blockchain technologies to improve financial risk management.
  • Enhanced governance frameworks: Establish robust governance structures to ensure effective decision-making and accountability.

Regtech Innovation

Regulatory technology (regtech) is revolutionizing the way FIs manage regulatory risk. Emerging tools such as:

  • Robotic process automation
  • Machine learning
  • Blockchain technologies

are helping firms stay ahead of the curve in managing regulatory risk.

Conduct Risk Management

Conduct risk remains a critical area of focus for many FIs. To ensure effective management, organizations must:

  • Define conduct risk in a way that suits their unique situation and strategy
  • Build a comprehensive inventory of conduct vulnerabilities to which they are exposed

Digital Compliance

Innovative tools and technologies are being incorporated into compliance projects, making digital compliance increasingly important. Whether through pilot projects or full-scale transformation, FIs can benefit from the latest advancements in this area.

Payments Modernization

Payments Canada’s roadmap for modernizing payments will improve speed and flexibility by 2020, ultimately strengthening Canada’s global competitive position.

Cyber Risk Management

Cyber risk is a critical concern for Canadian FIs, particularly those with EU operations or that process personal data of individuals in the EU. With the General Data Protection Regulation (GDPR) coming into effect, FIs must be fully prepared to meet its requirements.

Risk Operations Function Transformation

The risk operations function within many FIs is undergoing a transformation to better manage anticipated challenges and new emerging risks. By adopting effective risk management strategies, Canadian FIs can stay ahead of the curve and maintain their competitive edge in an increasingly complex regulatory environment.

Conclusion

By staying informed about these key regulatory trends and implementing effective risk management strategies, Canadian financial institutions can navigate the complex landscape of innovation, talent, and regulatory change with confidence. Whether it’s leveraging advanced technology, regtech innovation, or digital compliance, FIs that adopt a proactive approach to risk management will be better equipped to stay ahead of the curve and maintain their competitive edge in an increasingly complex regulatory environment.