Risk and Compliance Research Outlook 2021

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GETTING AHEAD OF RISK CHALLENGES IN A VOLATILE ENVIRONMENT

The turbulent year just past saw financial institutions responding at record speed to challenges on all fronts: rapid bust and boom cycles and gyrating balance sheets, a perfect storm in operational risk, and unprecedented levels of fraud exploiting a vulnerable population and chinks in the armour of financial crime and cybersecurity operations.

These challenges will continue in 2021, accelerating the adoption of digital technologies in risk management and compliance. Risk operations have a crucial role to play in keeping financial institutions on an even keel during times of volatility, but in order to do so will have to strengthen their own capabilities. For financial crime and compliance operations, efficiency, automation and AI, and remote support including cloud-based delivery will be key. Next generation technology and new digital approaches are turbocharging financial risk models. And cloud-based regtechs are leading a revolution in integrated, real time operational risk management.

Celent’s Risk team is in touch with financial institutions and their technology partners around the world, developing new perspectives to help you make the right strategic technology choices in the short, medium and longer term. Our clients have access to our insights through traditional ways — reports, blogs, access to our analysts — and new media like interactive virtual roundtables and snap polls.

As you face hard decisions in the areas of technology and partnerships, Celent is here to support you. We can help you vet partners and technologies as you respond to regulation, changing risk challenges and operational models, and growing cost pressures. Celent is committed to helping our clients assess the technology implications across the spectrum of risk management and compliance.

REMAKING RISK FOR THE DIGITAL ERA

The rapid pace of change in digital financial services and the historic challenges of the new decade are leading to the deployment of advanced technologies to manage the risks. Enhancing risk management capabilities will be an important factor in determining winners and losers in a digital world.

Celent’s Risk research focuses on technology strategies for optimizing financial and operational risk across the financial services industry. We examine new technologies and digital approaches to manage financial risks and integrated, real-time paradigms for governance, risk, and compliance (GRC). Our industry-leading research on financial crime compliance keeps you up to date on next-generation technologies and regtech for anti-money laundering (AML) and know your customer (KYC), fraud, and market surveillance. Celent sees three key themes continuing in 2021:

These themes are playing out across the Risk universe, including financial and operational risk management and financial crime.

Financial Risk Management

Over the past decade, financial firms have put effort into connecting siloed data to achieve an enterprise-wide view of financial risk and strengthening analytics for modelling and stress testing. The next stage will involve using digital technologies, AI, and alternative data to monitor financial risks and update scenarios in real time in order to deal with fast-moving events in a volatile world.

Operational Risk Management

Traditional GRC operations have been siloed by line of business and operational functions as well as by the technology systems to support them. Overcoming these barriers by means of an integrated risk management approach and leveraging digital technologies to consume and analyze quantitative and qualitative data in real time will be key to managing the intensifying risks of financial services today and having a strategic impact on a firm’s risks and opportunities.

Financial Crime

Financial crime poses a significant threat in terms of regulatory and reputational risk. The pandemic-fuelled surge in fraud, money laundering, and cyber crime is accelerating the adoption of AI, software robotics, and other digital tools and data by financial institutions in order to drive increases in the efficiency and efficacy of financial crime operations. A rapidly developing ecosystem of agile, cloud-native regtech solutions as well as investments in next-gen capabilities by incumbent technology providers is supporting the digitization and automation of financial crime operations.

In 2021, Celent will guide you through the changing technologies, solutions, and sourcing models financial institutions can bring to bear on the intense risk and compliance challenges of the new decade; and how improved risk practices can support the business in the digital age.

VENDORMATCH

Celent’s flagship ABCD vendor reports provide in-depth profiles and evaluations of the leading providers of risk and compliance technology. VendorMatch, Celent’s new vendor discovery tool, is playing an increasingly important role in our vendor analysis research. Celent also offers VendorMatch for direct use via freemium and premium service models. See more at https://www.celent.com/vendormatch.

Contact us for more information about what we have planned in Q1.

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