Risk professionals have been forced to adapt to and deal with several changes in the industry since late 2019, the time when coronavirus started spreading.
The Covid-19 pandemic “Deprioritized Regulatory Compliance” and redirected risk management in the financial landscape in the following directions:
Private risk management will expand and broaden in 2022, partly because of the ramifications of the pandemic. While government vaccine mandates are unlikely to be imposed in many countries due to legal challenges, individuals choosing not to receive a COVID-19 vaccine may see their health insurance premiums rise to reflect the likelihood that they will require hospitalization or costly medical treatment.
Risk managers will be tasked with translating longer-term threats into short-term opportunities for businesses and policymakers. For example, households may have difficulty incorporating the uncertain cost of carbon emissions today on the lives of people three or four generations from now. However, with respect to air quality and reduced illness, they can appreciate the immediate benefit of switching from coal to less polluting energy sources. The most successful CEOs, CROs and other risk managers will be those who can translate a long-term vision into a series of short-term actions with clear, immediate payoffs.
In the future, widespread probabilistic thinking will lead to more fruitful discourse and better decision making. Demand for people who can speak the language of risk and translate it for others will only increase over time.
Risk managers will look to diversify the number and types of models they use, to get a broader perspective on the likelihood of default and loss severity. Machine-learning models will take on a larger role, as firms look to incorporate more timely data in their risk assessments.
In the next phase, financial institutions will focus on developing data and tools to better assess interrelationships and dependencies across firms, customers and industries. We already see this happening, as businesses focus on their supply chains and lenders look to gain of a better understanding of their customers (KYC). Increasingly, to ensure firms can navigate whatever threats emerge, risk managers will need to understand both indirect and direct threats. Moreover, they’ll need to develop risk mitigation plans that focus on organizational structure and linkages.
This forum aims to achieve a balance between scientific theory and practice, with a focus on all major emerging methodologies in line with international best practices and regulatory requirements. This forum will also provide banks and regulatory authorities with a platform to learn from practical examples of how to move flexibly to implementing the new regulatory requirements.
On completion of this Forum, participants will be able to have a clear, proper and practical understanding of the following topics: