Risk Intelligence
In this, the first in a three-part insight series based on our latest research, we look at the emerging risks and key challenges that concern risk and compliance managers the most.
Conducted by CeFPro, in partnership with LSEG Risk Intelligence, the research involved surveying 120 financial services risk professionals across the US and EMEA to develop an understanding of the real-world challenges that define the risk space. One-on-one interviews were also conducted.
Exploring the dynamic risk landscape
The risk landscape is highly dynamic, with evolving technology increasingly leveraged by bad actors to commit new forms of financial crime.
Emerging threats are creating challenges for organisations, as they need to respond at speed – of particular concern is that sophisticated financial criminals are so adept at leveraging emerging technology that they are often able to commit crimes more quickly than organisations can implement appropriate compliance policies and processes.
Our survey reveals that, overall, just 35% of respondents are “very” or “extremely” confident that their organisations are equipped to tackle emerging financial crime risks and threats.
The state of financial crime compliance programmes in US and EMEA
Drilling down, we asked respondents about the predicate crimes that concern them most, and the top three cited were:
- Fraud
Notably, 92% of risk professionals identify fraud as a predicate crime that will negatively affect their organisation’s business.
- Cybercrime
A significant 78% identified cybercrime as a top concern. In a related question, respondents were further asked about the factors they feel could potentially impact the success of their organisation’s financial crime risk management efforts, with the leading concern – selected by 83% of respondents – being the speed of technological advancements and cybersecurity threats. This is unsurprising, given that firms face direct financial and reputational repercussions if data is stolen or bad actors commit fraud.
- Money laundering
Money laundering – which can cause substantial damage to the integrity of society and weaken the rule of law – was identified as a further top concern, and was selected by over two thirds (70%) of respondents.
An evolving regulatory backdrop
An evolving regulatory backdrop is adding further pressure to already stretched compliance teams, as they are tasked with interpreting and implementing updates to ensure that they remain compliant with changing obligations:
- A substantial 58% of respondents say they are concerned about fast-evolving risk and regulatory frameworks that could potentially impact the success of their organisation’s financial crime risk management efforts.
- 41% of respondents cite an inability to keep up with a complex and fast-changing regulatory landscape as a primary challenge in meeting standards for screening and due diligence.
- 29% say a lack of manpower is a further primary challenge in meeting these standards.
It is clear that rapid and ongoing regulatory changes have led to concerns about complexity and keeping pace with shifting obligations, a situation that is, in part, being driven by a shortage of human capital. These pressures are particularly relevant when one considers the sanctions landscape. Against a dynamic geopolitical backdrop, changes to sanctions regulations can happen on an almost daily basis.
Our report concludes that there is concern about emerging risks around crimes such as fraud, cybersecurity and money laundering. Alongside changing risks, a rapidly evolving regulatory landscape remains a key threat to effectively managing future risk – but with the right combination of data and technology, organisations can find better ways to respond to financial crime, both quickly and effectively.
Legal Disclaimer
Republication or redistribution of LSE Group content is prohibited without our prior written consent.
The content of this publication is for informational purposes only and has no legal effect, does not form part of any contract, does not, and does not seek to constitute advice of any nature and no reliance should be placed upon statements contained herein. Whilst reasonable efforts have been taken to ensure that the contents of this publication are accurate and reliable, LSE Group does not guarantee that this document is free from errors or omissions; therefore, you may not rely upon the content of this document under any circumstances and you should seek your own independent legal, investment, tax and other advice. Neither We nor our affiliates shall be liable for any errors, inaccuracies or delays in the publication or any other content, or for any actions taken by you in reliance thereon.
Copyright © 2024 London Stock Exchange Group. All rights reserved.
The content of this publication is provided by London Stock Exchange Group plc, its applicable group undertakings and/or its affiliates or licensors (the “LSE Group” or “We”) exclusively.
Neither We nor our affiliates guarantee the accuracy of or endorse the views or opinions given by any third party content provider, advertiser, sponsor or other user. We may link to, reference, or promote websites, applications and/or services from third parties. You agree that We are not responsible for, and do not control such non-LSE Group websites, applications or services.
The content of this publication is for informational purposes only. All information and data contained in this publication is obtained by LSE Group from sources believed by it to be accurate and reliable. Because of the possibility of human and mechanical error as well as other factors, however, such information and data are provided "as is" without warranty of any kind. You understand and agree that this publication does not, and does not seek to, constitute advice of any nature. You may not rely upon the content of this document under any circumstances and should seek your own independent legal, tax or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Neither We nor our affiliates shall be liable for any errors, inaccuracies or delays in the publication or any other content, or for any actions taken by you in reliance thereon. You expressly agree that your use of the publication and its content is at your sole risk.
To the fullest extent permitted by applicable law, LSE Group, expressly disclaims any representation or warranties, express or implied, including, without limitation, any representations or warranties of performance, merchantability, fitness for a particular purpose, accuracy, completeness, reliability and non-infringement. LSE Group, its subsidiaries, its affiliates and their respective shareholders, directors, officers employees, agents, advertisers, content providers and licensors (collectively referred to as the “LSE Group Parties”) disclaim all responsibility for any loss, liability or damage of any kind resulting from or related to access, use or the unavailability of the publication (or any part of it); and none of the LSE Group Parties will be liable (jointly or severally) to you for any direct, indirect, consequential, special, incidental, punitive or exemplary damages, howsoever arising, even if any member of the LSE Group Parties are advised in advance of the possibility of such damages or could have foreseen any such damages arising or resulting from the use of, or inability to use, the information contained in the publication. For the avoidance of doubt, the LSE Group Parties shall have no liability for any losses, claims, demands, actions, proceedings, damages, costs or expenses arising out of, or in any way connected with, the information contained in this document.
LSE Group is the owner of various intellectual property rights ("IPR”), including but not limited to, numerous trademarks that are used to identify, advertise, and promote LSE Group products, services and activities. Nothing contained herein should be construed as granting any licence or right to use any of the trademarks or any other LSE Group IPR for any purpose whatsoever without the written permission or applicable licence terms.
