Financial regulation – РИСК-АКАДЕМИЯ – АНО ДПО ИСАР

EU’s DORA regulation explained: New risk management requirements for financial firms

riskacademy — Thu, 19 Nov 2020 06:37:14 +0000

In October 2020, the European Union (EU) published draft legislation to codify how financial firms manage digital risk. Announced as part of the EU’s new Digital Finance Strategy, the proposed Digital Operational Resilience Act (DORA) is designed to “consolidate and upgrade ICT [information and communications technology] risk requirements” across the financial entities to ensure all firms are “subject to a common set of standards to mitigate ICT risks.”

This broad set of rules could affect almost all corners of the financial sector in businesses large and small. For many firms, the proposed legislation may be less burdensome than current requirements and merely solidify current resilience efforts.

What is the Digital Operational Resilience Act (DORA)?

In February 2020 Europe’s systemic risk watchdog warned that a single cyber incident could lead to a systemic crisis that threatens financial stability. As financial firms rely more on their digital systems, the EU decided it should compel firms to ensure those operations are as resilient as possible.

The proposed act covers financial firms of almost all sizes across every sector of the finance industry, from credit…

Financial Crime During COVID-19: AML Fines on the Rise

riskacademy — Tue, 10 Nov 2020 12:00:03 +0000

Guðmundur Kristjánsson, CEO of Lucinity, discusses the recent uptick in AML fines and what this may portend for banks and other financial institutions in the fight against financial crime.

The number of fines for anti-money laundering (AML) failures during the first half of 2020 has already outstripped those for the entirety of 2019. It’s evident, then, that we’re sitting on the cusp of another potential surge in financial crime, as the COVID-19 pandemic increases pressure on people, processes and systems across the world.

How then, can banks and major financial institutions mitigate the risk of financial crime and the increasing sophistication of money launderers, especially when criminals thrive in such chaotic and uncertain times?

History Predicts the Future

When we look back, the common denominator tying together the 21^st century financial crime timeline is exploitation of a crisis. Possibly one of the most significant occurrences this side of the millennium took place on September 11, 2001 in New York City. The 9/11 tragedy prompted some of the biggest overhauls in anti-money laundering law and financial crime legislation in history, as the U.S. government sought to cut off terrorism funding at the source in the war against terror.[1]

The 2008 financial crisis provided another catalyst for…

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APAC insurance regulators’ response during coronavirus crisis

riskacademy — Sun, 01 Nov 2020 01:52:11 +0000

Fitch Ratings’ Mr Jeffrey Liew believes believes the prompt response by most insurance regulators across the APAC region will help insurers weather some of their key business risks during the coronavirus crisis. Capitalisation, earnings and liquidity positions of some insurers could come under pressure from the financial-market disruption and economic strain caused by the pandemic.

Insurance regulators in most APAC countries have introduced measures to safeguard policyholder interests while ensuring industry resiliency. Most relate to policyholder protection, capital preservation and business continuity, supervisory relief to reduce the administrative burden on insurers and improvements to risk management, among other areas.

Regulations to preserve capital strength and risk management

The capital-management measures introduced by some APAC regulators and the increasing commitment by regulators and insurers to strengthen risk-management practices will position insurers favourably to counter evolving risks posed by the pandemic.

Insurers in Australia and Singapore were asked by regulators to adopt a prudent and forward-looking approach to managing capital while…

Financial Stability Board Issues Report on Use of SupTech and RegTech

riskacademy — Tue, 27 Oct 2020 11:26:18 +0000

On October 9, 2020, the Financial Stability Board (FSB)[1] published a report on the use of supervisory (SupTech) and regulatory (RegTech) technology. This report summarizes the outlook, challenges and opportunities of SupTech and RegTech from the perspectives of FSB members, including Canada’s Office of Superintendent of Regulated Institutions (OSFI). More importantly, the report examines almost 30 case studies from regulators across the world highlighting the progress made and some of the challenges encountered along the way. Generally, there is consensus on the benefits of SupTech and RegTech. However, the challenges related to the implementation of these new tools continue to endure.

This Report follows prior developments in RegTech and SupTech. As discussed in our prior posts, “RegTech” can be understood as describing new technologies that facilitate the delivery of regulatory requirements. “SupTech”, on the other hand, can be described as the use of technology to support supervisory agencies to carry out their regulatory functions. The combination of “SupTech” and “RegTech” can provide a more efficient and effective regulatory process for both the…

OSFI launches consultation on technology risks in the financial sector

riskacademy — Tue, 15 Sep 2020 15:03:48 +0000

OTTAWA, ON, Sept. 15, 2020 /CNW/ – Today the Office of the Superintendent of Financial Institutions (OSFI) launched a three-month consultation with the publication of a discussion paper, Developing financial sector resilience in a digital world. The paper focuses on risks arising from rapid technological advancement and digitalization, as these trends impact the stability of the Canadian financial sector.

This consultation supports OSFI’s strategic objective to ensure that federally-regulated financial institutions and pension plans are better prepared to identify and develop resilience to non-financial risks before they negatively affect their financial condition. While technology is a key enabler for financial institutions and financial consumers, its widespread use and rapid adoption can pose risks in many different areas of the business if not properly understood and managed.

Understanding the financial sector’s use of technology and how technology risks are managed is central to this consultation. OSFI’s discussion paper focuses on the risk areas of cyber security, advanced analytics (artificial intelligence and machine learning), and the use of third party…

Basel Committee updates principles for banks’ operational resilience

riskacademy — Thu, 06 Aug 2020 11:20:25 +0000

In recent years, the growth of technology-related threats has increased the importance of banks’ operational resilience.

The Covid-19 pandemic has made the need to address these threats even more pressing. Given the critical role played by banks in the global financial system, increasing banks’ resilience to absorb shocks from operational risks, such as those arising from pandemics, cyber incidents, technology failures or natural disasters, will provide additional safeguards to the financial system as a whole.

Recognising that a concerted operational resilience effort may not prevent a significant shock resulting from a specific hazard, the Committee seeks comment on proposed Principles for operational resilience that aim to mitigate the impact of potentially severe adverse events by enhancing banks’ ability to withstand, adapt to and recover from them.

The Committee is of the view that operational resilience is also an outcome of effective operational risk management. Activities such as risk identification and assessment, risk mitigation (including the implementation of controls) and ongoing monitoring work together to minimise operational disruptions…

Risk modeling for Basel II webcast

riskacademy — Thu, 28 May 2020 08:00:27 +0000

Risk modeling for Basel II webcast #risk, #riskmanagement, #vosesoftware

Risk modeling for Basel II webcast

This is "Risk modeling for Basel II webcast" by Vose Software on Vimeo, the home for high quality videos and the people who love them.

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Risk modeling for Basel II

riskacademy — Wed, 20 May 2020 06:30:19 +0000

Risk modeling for Basel II #decisionscience, #decisionmaking, #vosesoftware, #riskmanagement

Risk modeling for Basel II

Central to the principles of Basel II (and III) is the necessity to model as precisely as possible a bank’s level of financial exposure. The more precisely a…

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