As financial firms make the transition to digital they also need to revamp their risk management, says EY in a recent paper, “Moving from analog to digital: a new paradigm for risk management.”
Written at times in breathless consult-eze, the paper can be confusing. In the introduction, EY notes that “Desired business outcomes such as firm profitability are becoming harder to sustain, especially as external pressures from unions, regulators, governments and other stakeholder groups are becoming harder to manage given the impact of social media.”
EY might have uncovered something previously unsuspected in financial services — pressure from unions. And while cleverly acknowledging that that profitability is a desired business outcome, it overlooks the pressure on profitability from competitors, both traditional finance firms and fintechs. As for how social media makes this harder to manage, that’s not explained.
Going digital creates new risks…Getty Photo
“At the heart of the new paradigm is adaptive digital risk management — incorporating management of risks associated with the digital transformation from the front- to back-office…
