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Financial Crime and Fraud in the Age of Cybersecurity
The Importance of Unified Risk Management
In today’s evolving landscape of financial crime, it is essential for financial institutions to adopt a unified risk management approach. This requires integrating business, operations, security, and risk teams for efficient intelligence sharing and collaborative responses to threats.
- A unified risk management approach enables financial institutions to stay ahead of emerging threats and reduce the risk of financial crime.
- It also fosters a culture of collaboration and information sharing across departments, leading to more effective risk management.
Benefits of a Holistic View
A holistic view of financial crime enables institutions to optimize customer experience, improve digital trust, and enhance business outcomes. This approach considers the entire spectrum of financial crime risks, from traditional banking crimes to modern threats such as cyber-enabled fraud.
- Survey after survey has shown that banks are held in high regard by their customers for performing well on fraud.
- A holistic view of financial crime also enables institutions to make more informed decisions and improve their overall risk management strategy.
Designing the Target Risk Operating Model
When designing a target risk operating model for financial crimes, fraud, and cybersecurity, banks should consider the following key questions:
- Processes and activities: What processes and procedures are in place to prevent and detect financial crime?
- People and organization: Who is responsible for managing financial crime risks within the institution?
- Data and technology: What data and systems are used to identify and respond to financial crime threats?
- Governance: What governance structures are in place to oversee financial crime risk management?
Integration of Cybersecurity and Fraud Units
Most banks have begun the journey by closely integrating their cybersecurity and fraud units, enhancing information sharing and coordination across silos. This integration enables greater risk effectiveness and efficiency.
- A leading US bank set up a holistic “center of excellence” to enable end-to-end decision making across fraud and cybersecurity.
- A global universal bank has combined all operations related to financial crimes, including fraud and AML, into a single global utility.
Successful Integration Examples
The following examples demonstrate the successful integration of cybersecurity and fraud units:
- Leading US Bank: Set up a holistic “center of excellence” to enable end-to-end decision making across fraud and cybersecurity.
- Global Universal Bank: Combined all operations related to financial crimes, including fraud and AML, into a single global utility.
By adopting a unified risk management approach and integrating cybersecurity and fraud units, financial institutions can stay ahead of emerging threats and improve their overall risk management strategy.