COVID-19: Continuing Impact on Risk Management for Financial Institutions
The financial services industry continues to be focused on responding to the diverse set of challenges presented by the economic and operational fallout from the pandemic.
While the transition to work from home arrangements has gone relatively well, organizations are now challenged with assessing and balancing the risks of a phased return to the workplace coupled with longer-term remote working arrangements.
In addition, the financial impacts are becoming more transparent with U.S. banking results dominated by increased provisions for credit losses and lower interest income resulting from a sustained decrease in interest rates, albeit offset by increased trading revenues for some.
These unprecedented challenges will continue to have a broad impact on the risk profile of financial institutions for some time, both financial and operational, particularly around the following themes:
- Financial Impacts
- Business Resilience
- Regulatory Compliance Risk and Fraud
- Litigation and Regulatory Enforcement Risk
COVID-19 Impact on Regulatory Priorities
While institutions of all sizes are dealing with COVID-19 related disruptions, regulators have also had to adjust their supervisory approach and expectations. Regulators including the Federal Reserve Board (FRB), Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) have issued guidance granting flexibility in implementing certain new regulatory requirements and adjusting their priorities to allow institutions to focus on their most pressing issues and customers affected by the pandemic.