The ORX Operational Risk Horizon Report covers emerging risk categories, the external macroenvironment in six main areas, and key risks in focus such as emerging technology, digital assets and climate risk.
The top 5 emerging operational risks for the financial sector this year
1. Advancing cybercrime
Despite our participants reporting that cybercrime tends to be well managed, 89% placed it in their top 5 risks. There’s a general sense within the industry that cyber threat exposure could increase over the next 12-36 months. Some current impact concerns are data loss or breaches, regulatory scrutiny and fines, reputational impact and erosion of trust, expenses associated with remediation and training, and requirements for additional insurance.
2. Business disruption
Business service disruption presents a greater threat in 2023 than a year ago. Some of the main risks concerns are direct and indirect cyberattacks, overreliance on specific technology or suppliers, reliance on interconnected supply chains and technology infrastructures, hybrid working, and demand for 24/7 availability of services. There’s overall recognition about the increased likelihood of simultaneous disruption in a turbulent external macroenvironment.
3. Technology and digital strategy
Firms shared in our Horizon study how they are responding to take advantage of the unprecedented pace of digitalisation whilst balancing skills shortages and competition pressure. The main risks concerns include the rate at which technology is evolving and subsequently adopted and implemented, ethical use of data and technology including AI, and the s
4. Climate risk
Climate risk is now considered and managed as a material and emerging risk and continues to present uncertainty for the future. The main risk concerns raised in the study are greenwashing, lack of historical data for modelling, regulatory uncertainty, geographic concentration risk, climate activism, reputational damage, future-proofing new ‘green’ products, ‘green credentials’ of associated suppliers and third parties and the cost of transitioning.
Data is a perennial risk on its own and it is further aggravated due to its interconnectivity with other risks. Data governance and cyber defence strategies are expected to remain top priorities with data quality, usability and control environment complexity highlighted as main concerns in the survey.
Understand what's driving the risk landscape
The report and supporting information is now available for all ORX members to access as part of their annual membership subscription, or is available for non-members to purchase for just £1500.
If you buy the full report and supporting information, you'll get an overview of the top emerging risk categories selected by the financial organisations that took part in the study. You'll also get breakdown of the drivers and concerns for each category helping you understand what factors are impacting the risk landscape. The report provides examples of actions that other firms are taking in response to different risks, helping you prepare for the biggest risks on the horizon.