106 posts categorised "Risk strategy"

24 September 2019 Can you tolerate being punched in the face? Publication of the regulatory consultation paper on operational resilience is imminent. The concept of setting impact tolerances for firms’ most important business services, introduced in the discussion paper, will be integral to this. Firms should not shy away from what can seem like a difficult question. There is a logical sequence of activities that can be undertaken to set tolerances, stress test them and monitor against them. PwC has been tackling this topic with firms across the financial sector and we will publish our approach to this challenge soon. In the meantime, we strongly encourage firms to start the groundwork by being clear what important business services you operate.
15 July 2019 Parliament keeps the spotlight on operational resilience When you enter the Houses of Parliament it is impossible not to be impressed by the historical significance of the setting. But despite the Victorian grandeur of the location we were there this week to discuss a very modern phenomenon - IT and other operational failures in the financial services sector. Following a number of high profile operational incidents in the financial services sector in recent years, the Treasury Select Committee (TSC) has launched an inquiry into this topic. We were very privileged to be called to give evidence to the first public session of the inquiry to discuss a recent report we produced with TheCityUK on operational resilience.
15 July 2019 Making the first move on technology for regulatory reporting quality assessments A speech by Mark Carney, the Governor of the Bank of England, in June 2019 stated that the Bank of England is launching a review to explore the transformation of the hosting and use of regulatory data over the next decade. This includes proofs of concepts to test how the Bank can automatically extract regulatory firm data.  The speech clearly highlighted the Bank’s increased focus on exploring how Artificial Intelligence (AI) and Machine Learning (ML) technologies can be used to collect and interpret supervisory data from firms to minimise manual processes. The Bank aims to pull the data on demand from firms, making the regulatory reporting process more efficient and less expensive.
04 July 2019 All change please: the evolving regulatory focus The annual speeches by the Chancellor and Governor of the Bank of England (BoE) at the Mansion House are always important dates in the diary for the financial services sector. This year’s speech was the last that Mark Carney will give as Governor and many expect that Philip Hammond will no longer be Chancellor once a new Prime Minister is appointed. In ‘normal’ times the replacement within a six month period of the two most influential financial services policy makers in the UK would represent an unusual amount of change. But as the sector currently faces a number of profound disruptions, challenges and opportunities, the 2019 speeches are more likely to be remembered as an important signal of the policy makers’ response to these.
31 May 2019 Becoming operationally resilient - the imperatives: Part 1 - The regulatory imperative How can you say you’re good at change management when it’s the most common cause of IT failure? How are you able to manage the relationships with your growing network of third parties?Forget questionnaires, how will you perform when we put your cyber framework to the test?These are the frank questions the FCA is likely to ask financial services firms this year based on a reading of its 2019/20 business plan, published in April. This is the latest publication showing that regulators have their sights squarely set on ensuring that firms are operationally resilient, and comes after the PRA published its own business plan. In the first of a two-part blog looking at the drivers for firms’ action on operational resilience we consider the regulatory imperative; part two will cover the commercial imperative.
11 April 2019 Beyond Brexit- a new financial services regulatory framework for the UK? Since the EU referendum financial services firms, regulators and the Government have focused heavily on attempting to mitigate the risks to the sector and the wider economy from the UK leaving the EU without a deal. But the announcement in the Spring statement that the Government would set out its approach to consulting on the UK’s regulatory framework after Brexit before the summer suggests that HM Treasury (HMT) is starting to look beyond Brexit at the big question of how the UK’s financial services sector is regulated and supervised post-Brexit. So what are the major issues to decide? And how could the outcome of these consultations impact financial services firms operating in the UK?
21 February 2019 Insurance - resilience against a potential downturn A general economic slowdown has led to negative market sentiment in recent months, with equities falling and credit spreads rising.  Risks of a further economic deterioration remain.One can envisage a downside scenario – not necessarily a central case - in which equities fall further, credit spreads widen, interest rates fall in response to a flight to quality, FX rates fluctuate, and property prices continue to stagnate, or fall.  Inflation might also rise in the short term, in response to currency movements, and short term interest rates may exhibit particular volatility in response.  Complicating matters further, it is possible that a downside scenario may reveal itself only gradually, with asset prices appearing stable for periods of time, despite being vulnerable to sell-offs.
20 February 2019 Taking accountability for operational resilience The operational resilience of the financial services sector, and particularly the banking sector, has rarely been out of the news in recent years. How are senior industry leader feeling as yet another operational failure hits the front pages? What is clear is that the impact of outages on consumers means industry, regulators and other policy makers are increasingly prioritising the topic. At the heart of the regulators’ philosophy on operational resilience is a view that boards are responsible for ensuring the resiliency of their institutions but that senior individuals, in the form of senior manager function 24 (SMF24) should also be held to account for operational failings
08 February 2019 Why should EEA banks ramp up their post-Brexit regulatory planning? With Brexit now less than 50 days away, all firms are well advised to speed up their preparations for the UK’s exit from the EU. Much of the focus on the impact of Brexit on the financial services sector has been on those firms providing services from the UK into the EU-27 and what a loss of passporting will mean for them. But for those European Economic Area (EEA) banks that passport into the UK there will also be significant changes to the regulatory requirements they face. These include changes related to the Senior Managers and Certification Regime (SM&CR) and the Financial Services Compensation Scheme (FSCS), as well as a number of other regulatory reporting requirements for third-country branches
05 February 2019 Illiquid assets and open-ended funds: What are the big issues for firms? The Brexit referendum result in June 2016 exposed some potential structural vulnerabilities in the asset management sector. It highlighted that open-ended funds invested primarily in illiquid assets can struggle to satisfy high demand for redemptions under stressed market conditions, at least without being forced to sell those underlying assets very quickly at a significant discount. While the existing liquidity management measures avoided major problems, the Financial Conduct Authority (FCA) has now consulted on proposals to mitigate the risk in case of a repeat event. While the industry supports the regulator’s focus on this, the more engaged firms have identified a series of challenging implementation issues among the proposed requirements. So which aspects of the proposals have triggered most debate across the industry so far and are likely to have the most significant impact?