Regulatory risk in banking- what it is and how to manage it

Regulatory risk in banking: what it is and how to manage it?

Regulatory risk in banking refers to legal or regulatory restrictions, financial losses, or loss of credibility that are at risk of laws, and regulations ، Compliance with the bank may arise from the failure of the bank, and industry standards related to banking products and services. Regulatory risk is not limited to banking, but can also affect securities, companies, sectors, or markets.

Regulatory risk in banking is an important and complex challenge for banks, especially in the context of increasing globalization, digitization and innovation. Banks face a dynamic and diverse regulatory environment that varies in jurisdiction and domain. Banks also face pressure to meet the expectations of different stakeholders, such as consumers, investors, regulators, and society at large.

How can banks manage regulatory risk effectively and efficiently?

Here are some important steps that banks can take:

 Establish a strong regulatory risk governance and strategy. Banks should have a clear vision and direction for their regulatory risk management, which is linked to their business goals and risk appetite. Banks should also have a well-defined organizational structure and roles and responsibilities for monitoring and implementing regulatory risk.

Develop and implement a comprehensive regulatory risk management framework. Banks should have a systematic and consistent process for identifying, evaluating, prioritizing, mitigating, monitoring, and reporting their regulatory risks. Banks should also have appropriate policies, procedures, controls, and tools to support their regulatory risk management activities.

Enhancing their regulatory risk culture and awareness. Banks should promote a culture that values compliance and ethics and encourages transparency and accountability. Banks should also raise awareness and inform their staff and stakeholders of their regular responsibilities and expectations.

Technology and innovation to improve their regulatory risk performance. Banks should use data analytics, artificial intelligence, automation, cloud computing, and other emerging technologies to enhance their regulatory risk capabilities. Banks also want to find new ways to provide their products and services that are in accordance with the rules and regulations and are beneficial to their customers.

Engage and communicate with regulators and other parties concerned. Banks should maintain an open and constructive dialogue with regulators and authorities that oversee their activities. Other banks, industry associations, standard setters, and academics, to share best practices and influence regulatory agendas for banks ، should also cooperate with civil society organizations.

We have helped many banks in different regions and classes achieve their regulatory risk targets. We have also developed thinking leadership and insights on various topics related to regulatory risk in banking. We invite you to find our website to learn more about our abilities, products, client stories, market positions, and publications.

The regulatory risk in banking is not just a challenge۔ It's also an opportunity. By effectively and efficiently handling regulatory risk, banks can protect their value, increase their credibility, and create a competitive advantage. Contact us today to find out how we can help you.