Published May 26, 2016
The risk management challenges facing today’s non-banking financial market often stem from regulatory change. Organizations within the sector recognize they are moving into a new era as regulators roll out revamped regimes that are intended to increase transparency and limit the impact and spread of future market crises. However, many firms continue to struggle to find solutions that can help them respond to regulatory change. While infrastructural change is clearly necessary in this new market environment, what system elements should organizations focus on to address new rules and standards? And, more to the point, can they develop the necessary tools and processes to not only support essential compliance efforts but also create an offering that can compete in the face of current and future market changes?
As concerns about regulatory risk and dissatisfaction with support from regulators continue to permeate the Asian financial market, many organizations anticipate an increase in infrastructural investment this year, according to a survey conducted by Asia Risk and Wolters Kluwer. The survey of more than 140 market participants was conducted across a range of job functions, as well as organization types and sizes, across a variety of countries within the Asia-Pacific region. Respondents answered questions about current challenges and concerns in relation to risk management, as well as investment plans in areas such as data management and general technological infrastructure.
The results reveal that market participants face a range of challenges in risk management, and many have concerns about regulatory risk in particular. Organizations in the region have a list of regulation-related concerns, topped by concerns about simply keeping abreast of change. The ability to address rules from multiple jurisdictions via internal systems and processes was also a running theme among participants. It is unsurprising then that investment in automation looks set to be a key trend over the next year, according to the survey. This would allow organizations to create an internal infrastructure that is not only compliant, but also allows organizations to use new requirements implemented since the 2008 financial crisis to boost performance. The results show that some firms already have automated systems and processes in place, but most organizations have plans for investment in this area in 2016. If these firms live up to the investment expectations outlined by the survey respondents, the resulting developments could address the concerns relating to compliance and risk management that are evident throughout the survey results. But will these investment plans come to fruition?
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