CGF Research Institute (Pty) Ltd

Risks facing the Financial Services Industry


Since the turn of the millennium, the financial services industry has arguably become one of the most regulated sectors world-wide. This heavy external and self-imposed regulatory drive shows no signs of abating.


Numerous surveys   - locally and abroad - routinely track and rate the main concerns of the banking sector as well as the institutional preparedness to handle the underlying risks. Much of the detail and statistics contained in these surveys reflect the regulatory pressures under which many organizations operate.    Evidence suggests that while institutions scramble to respond to the increased regulatory demands, they are not reaping the potential strategic advantages of improved governance and may well have started to neglect important issues such as business continuation, strategy and rogue trading.


About a third of the concerns identified in the Banana Skins 2005 survey, for instance, refer to governance related topics applicable to operations, functions and processes found across all industries.    On closer inspection, these concerns have a universal flavour and, as such, permeate many sectorial boundaries.


Besieged by regulatory pressures, the financial sector has steadily pioneered the making of institutionalized risk management.     In so doing, it has offered onlookers in other industries the powerful lessons of the early adopter.    It is up to other business sectors to ponder and capitalize on the opportunities and pitfalls that these experiences present.


This newsletter has been supplied courtesy of CGF Research Institute (Pty) Ltd, a strategic partner of Proudly South African.


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