please answer question 2

Susannah Hammond; Senior Regulatory Intelligence Expert 8 Feb 2022 A new report shines a light on five key risks that financial services firms should be concerned about in 2022 By and large financial services firms weachered the initial chaos of the pandemic reasonably well with a combination of flexibility, deployment of technology, and, in the case of banks, balance sheets which had been substantially bolstered in the wake of the financial crisis. The chalenge for financial services frms now is the consideration of what they wish to keep from the changes they made due to the pandemic. The pandemic is not the only driver of change and challenges, of course. Shiting geopolitics, the emergence of climate risk as a key issue for financial services firms, the speed of innovation in cryptos, and the need to deliver consistently good customer outcomes are all key board room considerations. The risks that financial services firms fun are insthution-specific, but there are some high-level risks applicable to all firms, irrespective of geography or sector. Here are five key risks for firms in 2022 : 1. Data govemance The need for a robust approach to data governance is incressingly critical. As a first step, firms need to embrace the fact that data is a key strategic asset and from there, build a business-wide approach to data aggregation, management, storage, security, retrieval, and destruction. In other words, build a business-specific approach to data governance. Successful data governance will have multiple benefits, including increased line of sight to risks being run in a hybrid working environment, the ability to comply with the recently agreed-upon climate risk reporting requirements, and enhanced record-keeping. 2. Operational resilience The pandemic is nothing if not a test of the operational resilience of financial services firms. At a minimum, firms need to consider operational risk management - such that the management of operational risk should identity extemal and internal threats and potential falures in people. processes, and systems on a continuing basis. Firms also need to prompty assess the vulnerabilities of critical operations and manage the resulting risks in accordance with the operational resilience approach. 3. The ' G ' in ESOG ESG stands for environmertal, social and coporate govemance and covers a wide naeep of evolving risis and required actions for firms going foreart as part of the giobal apcroach to cimate risk mbigation. The environthertal and socisi exments of ESG are important, but without robust chalenges. A key defiverable is the suntainablity-related disckosure scandards which were agreed upon, at least in draft, of COP26. For ferme meting the sroposed reporting requarements, the process wil involve the colection, collation, ate reproductbie iesoring of millions of data points. And that is before juristictions overtay their owe stecte reainemect. There is a clebal shortage of E5.5 skils and experierce. and fres should not underestimate the comptesify of the govemance aspect of thin chalenge, which Deer will reeded to meet in order to deveiop criteria and exmectatons. 4. Remunerafion In a measure of how crucial compensation, remuner ufion, and good bonus design a perceived, these issues were the very fret thing the Financial Stakilty Boost (F58) bddressed in the wake of the financial erisis, impiementing supranationsi coesentation stantwta that sought to drive betier risk-aware behaviors. That was 5eplember 2009 , of coune, and now, the Fs8 is continuing to review the dobal implemertalion and practical moact. The FSS s a sevent progress reccot covers the practices of the largest firancial insthutoas in the baning. nworance, and asset management sectors and highlights uneven progrss towardt inciementing the srinciples and tarstarde, with banks been to be relstively more advanced than ineurance and asset mandgenent fima. Firms would be well advised to benchmark thee agcroach to con perdation with the latest FSB progress regort. There is mach granular detal on emerging good and better pracfices, together with an insight inte how firms are navigating certain legal thalenget, and the use of compensation to promble a tound cutture and positive behavion. 5. Enabling technologies it is estimaned that the pandemic acceierated dgiul transtinmason by as much as twee years. Digeal tandformation is made possitie by enabing aechnoioges atich include application pregranting intertaces, big data analyties and anticisl italigence, biometrics, cisud computing (specifically outsourcing to the doud), and distrbuted ledger (iock hain) techrology Finms and their boarde need to be atile to enture the safe and sound asceten of afy new tochnaiogies so that the benefts can be reaped and the nisks arising tron the asegted of inevative actives are proactively and approgriately managed. The critical element is again povemance. Wehout agcroprately nitust corporate govemance, trancial sentces firms could tnd that not only do they tail ta reas the petential benetts but that regulanary issues are created that impact beth the flrm and senior individuats. Gone are the days whoc the If function, capatie or not, was trutted with driving technological change. A is now a pre-dequiste for board menters and serior a unagers to have um cient technotogical knowledge for ready access to that knowledge) to be aole to challenge and oversee a QUESTION TWO [26] 2.1. Evaluate the following two (2) approaches to loss prevention: 2.1.1. Engineering 2.1.2 Human / Personal (8) 2.2. Discuss the objectives of risk control to businesses