Beyond Deregulation: Redefining Risk Management

By Connor Nurse , Head of Broadgate USA

If you’ve thought about it, it’s too late.

Good risk management supersedes what’s happening in Washington. Deregulation or not, firms should be hard-wired from a compliance perspective.

As leaders face off against the broadest threat surface in history, the loosening of the regulatory reigns doesn’t diminish the need for vigilant compliance functions.

With the help of our CRO network, we’re going to explore this in more detail at our upcoming roundtable. In the meantime, check out the key insights from our discovery session below.

Underestimating AI

AI is likely the most underestimated facet of modern risk management. It’s made some big promises, but the consistent overestimation of its business impact spotlights a readiness problem.

We’re seeing the larger, well-resourced firms run away with their AI implementation projects, leaving the smaller players to fight for space back at the start line. This creates a compounding effect, widening the gap between the leaders and laggards.

For most, outsourcing is the only viable route to access the specialised talent and infrastructure required for effective AI implementation. Third-party risk management represents a major challenge here, particularly considering the increasing reliance on vendors, expanding threat landscape, and regulatory scrutiny.

Plus, the vendors themselves are often leaning on some form of AI. Firms will need to understand the risks involved with this even when their vendors aren’t operating in the same environment.

Data is at a Premium

We’re in a new era of ‘data-driven.’ From the emergence of pricing analytics to the spike in demand for business intelligence specialists, firms are rushing to make the most of their infinitely expanding data reserves.

That said, there’s a growing sentiment among some leaders that data is creating more challenges than it solves.

Firms rely on this data to measure business performance, build metrics, develop systems, and more recently, create products (hence the sharp rise of the data as a product market).

The increasing competition has placed a premium on both data and the talent that’s needed to harness it.

Data is perhaps the best space to see the convergence of tech and financial services influence the talent market, a space that’s increasingly tough to navigate for today’s hiring managers. Why? Here’s what our recruitment consultants are seeing:

• The growing complexity of role requirements is making it difficult for hiring managers to identify talent, increasing the time to fill project-critical positions. Specialised recruiters are well-placed to support the process, offering a blend of reach and market expertise that traditional back office functions often lack.
• While North American banks are leading the charge on generative AI integration, ?many firms are still struggling to navigate the high costs associated with modern technological transformation. Be it the cost of hiring talent, consulting partners, or the systems themselves, investing in these areas requires significant capital outlay and a clear understanding of what to expect from the returns. A lack of technological clarity at the board level is proving to be a major stumbling block.
• As areas like data science and business analytics take off, cross-industry demand for talented data professionals is growing. This leaves financial services to compete in the same talent pools as big tech, pharmaceuticals, and manufacturing.

Operational Resilience and Cybersecurity

It was fairly uncommon to see operational resilience make the headlines until recently, when thanks to 2023’s high-profile bank collapses, critical financial vulnerabilities were exposed in a new light.

Now, operational resilience commands the attention of rule makers, consumers, and leaders alike, driven to the top of the priority list by an always-evolving set of regulations (DORA, Basel, NIST CSF, the AI Act, etc.).

Combine this with the growing interdependency of third, fourth, fifth, and sixth-party vendors, and supply chains start to feel the strain. Smaller firms often lack the capacity to manage risk across this many layers, which means they’re forced to operate with less oversight as a result. ?

Somewhat ironically, the same technological advancements that have contributed to these complex interdependencies and heightened risks are also uniquely positioned to provide a solution.

A static approach will fall short in an era that demands more agility from firms, and consistent, proactive stress-testing – something generative AI is well-equipped to support – is a prime example of how technology can be used to enhance operational resilience.

The Intersection of Tech and Finance

We’re eager to learn more about how leaders and hiring managers are navigating the talent space – when it comes to risk and compliance, the intersection of tech and financial services is an exciting place to be, provided you can turn change into your advantage.

Whether you’re hoping to hire, get hired, or learn more about the Risk and compliance talent market in regulated business, our consultants are always looking to make new connections. Let’s talk: [email protected].