The financial services landscape is ever evolving, and in 2024 organizations are confronting a regulatory environment marked by unprecedented intensity and complex challenges. We’re sharing insights from several aspects of the regulatory sphere as the market is experiencing a surge in intensity, characterized not only by the introduction of net new regulations but by a high volume of issuances spanning across risk management. This includes regulatory compliance, third-party risk, enterprise risk, governance, and data.
Economic fluctuations, election-year discord, and legal actions further drive the intensity of the changes for this year. Key takeaways from our insights include a return to heightened risk standards, elevated expectations, a focus on data and model-like risks, the anticipation of supervisory and enforcement actions, and the enduring relevance of old regulations even in new areas. Regulatory expectations include supervisory intensity, a focus on agility, robust risk accountability, and the rise of risk sustainability across regulatory areas, requiring integration into financial analysis and day-to-day operations.
Regulatory attention continues to zero in on firms deemed "too big to manage," requiring strong liquidity management, resolution planning, and financial controls. Capital and valuations face mounting scrutiny, including risk calculations and stress testing. Threat actors, perpetrators of financial crime, fraud, and misconduct, are under increased regulatory focus, demanding improved detection, mitigation, tracking, and remediation. The spotlight is on fairness principles, emphasizing equitable access, treatment, and proactively dealing with product risks. And responsible systems, which encompass automated systems and innovative technologies, require a balancing act between innovation and trust building. Broad concerns around data, security, privacy, and the potential vulnerabilities within data governance are critical for meeting requirements.
In this dynamic regulatory landscape, organizations must proactively embrace strategies that go beyond meeting compliance requirements. Demonstrating sustainability in risk functions, integrating fairness principles, and adapting to the expanding focus on responsible systems and data security is crucial. Successful navigation of these challenges requires not only meeting regulatory standards but also instilling a culture of innovation, trust, and adaptability. By understanding and addressing these multifaceted challenges, organizations can position themselves not just to comply with regulations, but to thrive in an environment of continuous change and heightened regulatory scrutiny.
North Highland’s experts are ready to help you navigate the changes ahead. Learn more.