4 Growing Concerns Faced by Capital Markets Risk Leaders

Capital Markets CIO Outlook | Monday, August 03, 2020

Investors’ increasing growth for Environmental, Social, and Governance (ESG) investing and capital markets firms need to provide these assets, but they would have to evaluate ESG risk criteria.

Fremont, CA: Regulatory requirements and cyberattacks are two main issues for capital markets risk leaders. The data-rich environment poses a threat because, with the advancement of new technologies that have solutions to help those risks, it also has unexpected outcomes.

Here are four critical issues faced by capital markets risk leaders:

Defining Sphere of Control

A good strategy for capital market risk leaders is to focus on preparation and planning rather than prediction. Risk function cannot secure everything; therefore, it is essential to manage the businesses’ sphere of control.

Preventing Attacks

Cyberattacks introduce a specific risk for capital markets providers like trade disruptions and compromise significant international payments. Most capital market firms are not ready to manage cyber risk, and only 5 percent of surveyed capital markets risk leaders feel confident in tackling cyberattacks.

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Addressing Complex, Non-Traditional Concerns

Changing investor sentiment and growing interest in complex portfolios or non-traditional investments is another critical concern for capital markets risk managers. Investors search for increased profit returns, and complicated non-traditional issues sneak up the risk curve, which creates more problems for risk managers.

No Room for Complacency

The progression of regulations is a top issue for capital markets, risk managers, as they invest time and effort, but the continuing compliance work is seen obligatory as hefty compliance fines are charged outside of financial services.

Only 10 percent of capital markets study respondents feel highly confident about managing their impact.

LIBOR

With LIBOR retiring in 2021, non-risk business leaders have acknowledged the problems and seek help from their risk leaders to be ready.

A study finds only 8 percent of capital markets risk leaders viewing LIBOR as a top-three concern, in spite of it being unavoidable and complicated.

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