Heading into 2020, The Risk Management Association is focusing on eight risks. Learn about the top risks the financial services industry faces and how you can address them.

1. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Affairs · Securities Lending
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THE TOP RISKS CHALLENGING THE
FINANCIAL SERVICES INDUSTRY
As part of its role as an industry thought
leader, the Risk Management Association
identifies the top risks facing financial
institutions.

2. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Affairs · Securities Lending
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HEADING INTO 2020, RMA IS FOCUSING ON THE
FOLLOWING KEY AREAS:
Talent
Succession/
Management
Libor
Replacement
Geopolitical/
Political Risk
8
Climate
Risk
Strategic Risk/
Disruption
Cyber
Risk
Downturn
Preparation
Third-Party
Risk
1 3 4
6
2
5 7

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PREPARING FOR THE DOWNTURN
Banks are
ensuring they
have access to
talent that has
worked during
previous
recessions.
Stress testing
their credits
based on various
downturn
scenarios and
risk ratings that
project
probabilities of
default spanning
several years.
Bankers should
insist on strong
debt service
coverage and risk
premiums when
lending to volatile
industries—start
underwriting with a
thought for the
recession.
Some banks are shoring up their recession readiness plans.
Talent
Stress
Testing
Debt
Service
Coverage

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There are the
implications of the
still-very-uncertain
outcomes of the
trade wars and
Brexit.
Trade Wars,
Brexit
Populist
movements and
internal dissension
in nations across
the globe are rising.
Populist
Movements
A Harvard
economist recently
said a violent
crackdown by China
in Hong Kong could
be a tipping point
for a worldwide
recession.
Hong Kong
North Korea’s mix
of a young nuclear
program and
bellicose and
unstable leadership
is a constant worry.
North Korea
Geopolitical/Political Risk

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LIBOR REPLACEMENT
Libor expected to retire
on January 1, 2022
Roughly $200 trillion in
financial instruments is
tied to it.
Visit the RMA IBOR Transition Toolkit at https://www.rmahq.org/ibor.

6. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Affairs · Securities Lending
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STRATEGIC RISK/DISRUPTION
Trend: Fintechs
cooperating with
traditional banks.
We provide the
trusted
relationships
with and
access to
customers.
Fintechs
provide the
know how.
Fintechs help banks keep up with the
growing list of conveniences expected by
customers, e.g.:
Banking apps
that are
compatible
with the
Apple watch.
Fingerprint
log ins
Access to
updated credit
scores and
automated
tellers.
Technology is bringing about a hypercompetitive banking environment.

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THIRD PARTY RISK
Third parties can provide a ready gateway for intrusion into your systems
or allow the data to be stolen from their own systems.
Perform their due diligence
on third parties before
contracting with them.
Due Diligence
Be sure third parties guard
your data and treat your
customers and operate the
same way you would.
Like-Minded
Even though it may not
seem fair, the bank is
responsible if a third party
makes a mistake.
Proceed with Caution

8. Enterprise Risk · Credit Risk · Market Risk · Operational Risk · Regulatory Affairs · Securities Lending
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CYBER RISK
$150/record
Average cost of
an incident
$3.9 million

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TALENT/SUCCESSION MANAGEMENT
Risk
management
Ability to see
across risks,
to see the big
picture
Risk
personnel
rotates
through areas
of risk
Retiring baby
boomers
Replace with
new leaders
Changing
world
Changing
skill sets

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CLIMATE RISK
This Photo by Unknown Author is licensed under CC BY-NC
Climate change will have a substantial affect on financial and
nonfinancial risks. Banks need to weight the dangers and
address the risks posed to their markets.

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SHARE THIS PRESENTATION
Visit https://www.rmahq.org
for information on risk management.
RMA is a member-driven professional association whose sole
purpose is to advance sound risk management principles in the
financial services industry.
RMA helps its members use sound risk management principles to
improve institutional performance and financial stability, and
enhance the risk competency of individuals through information,
education, peer sharing, and networking.
Become a member today.