What are the current key risk and compliance trends?


With the financial industry a sector continuously ripe for disruption, the challenges surrounding risk and compliance in the industry are always evolving.

In a recent post by Aveni, the company outlined five of the current risk and compliance trends in the industry that chief risk officers are grappling with.

Aveni explained, “As the financial services industry continues to evolve, risk and compliance functions are facing unique challenges. At the forefront of this evolution, chief risk officers are working tirelessly to ensure that their organisations remain compliant with regulatory requirements while also protecting customers and stakeholders.”

The first key trend includes budget cuts with increased responsibilities. According to Aveni, one of the most pressing trends is balancing the need to manage growing risk with the constraints of limited resources.

The company explained, “CROs are facing pressure to do more with less, as budgets continue to be cut. This is making it increasingly difficult for compliance functions to keep pace with the rapidly changing regulatory landscape. To overcome this challenge, CROs are looking to technological innovation to find new ways to make the most of their current resources rather than increasing headcount.”

There is also growing regulatory pressure. The Consumer Duty deadline – set for July 31 – is just one of many examples of the substantial regulations that CROs must face. In this area, many firms are not where they need to be in their plans, and this, Aveni underlines, is creating a ‘certain amount of urgency and uncertainty’.

A third key trend is a growing focus on vulnerable customers. With the cost-of-living crisis biting down hard on many consumers wallets, there is little surprise that this is a key area of focus.

Aveni cited recent research from the FCA’s financial lives survey, which found that 24% of UK adults have low financial resilience, while 47% of UK adults show one or more examples of vulnerability.

The firm remarked, “CROs are facing pressure to ensure that their organisations are serving the needs of these customers, not just from a moral standpoint but also from a risk management perspective. The fines and reputational damage that can result from not serving vulnerable customers properly can be devastating, as we’ve all seen from the recent British Gas investigation into forcing prepaid metres onto vulnerable customers.  It’s clearly an area CROs must prioritise.”

There is also a requirement for greater risk coverage. Aveni stated that as the regulatory landscape continues to evolve to be more data-driven and require a wider view across the customer lifetime, CROs are facing the challenge of providing greater coverage with existing resources.

The final key trend is a stricter approach to return on investment. Aveni explained, “The final trend that we’ve noticed in our conversations with CROs is the growing focus on return on investment (ROI) when it comes to investing in new technology. CROs are becoming much more stringent in their requirements, demanding tangible proof of the ROI that new technology will deliver.

“This is a reflection of the ongoing pressure on risk and compliance functions to manage their resources effectively and ensure they’re providing maximum value to the organisation. By taking a more measured and strategic approach, CROs are helping to ensure that their tech investments deliver real business value not just in the short term, but well into the future.”

Aveni concluded, “As CROs continue to navigate the many challenges of operating in a tough economic backdrop, these trends represent some of the most pressing issues they are tackling. From budget cuts and increased regulatory pressure to the need for greater risk coverage and a focus on vulnerable customers, CROs have their work cut out for them.

“However, with the right tools and tech, CROs can be well equipped to meet these challenges head-on and make good on ambitions to put data-driven strategies at the heart of their company’s operating model.”

Read the full post here.

Aveni previously revealed that Aveni Detect had been made available on the Genesys AppFoundry marketplace.

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