please read case study and answer question Four

5 key risks for financial service firms in 2022 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 weathered the initial chaos of the pandemic reasonably well with a combination of flexblility, deployment of technology, and, in the case of banks, balance sheots which had been substantially bolstered in the wake of the financial crisis. The chalenge for financial services firms 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 diver 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 run are institution-specific, but there are some hightlevel risks applicable to all frims, irrespective of geography or sector. Here are five key risks for firms in 2022 1. Data governance The need for a robust approach to data governance is increasingly 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 apgroach to data govemance. Successtul data governance will have mutiple benefits, including increased line of sight to risks being run in a hybeid wocking erriironment, the ability to comply with the tecenty agreed-upon dimate risk reponting requirements, and enthanced 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 identify external and internal threats and potential failures in people, processes, and systems on a continuing basis. Fims also need to promplly assess the vulnerabilities of critical operations and manage the resulting risks in accordance with the operational resilience approsch. 3. The ' 6 in ESG ESG stands for anvisomental social and corperate govemance and coven a wibe twese of evolving risks and requied actions for frims going forward as part of the gicosl acprsech to dimate tisk mitigation. The envionmental and secial elements of ESG are imootart, but without robust copporale govemance, trancial service fims (among ochers) will simply not be able to delver on the chaleroes. A key deliveratie is the sumansolity-teinted daclosue standirds which aere agreed upon. a least in draf, a COP26. For flems meeting the proposed regoring recuiremerts, the process will involve the collection, colletion, and reproducble reporting of milisens of dics points. And that is belove jurisdidions oveftay their owa specite mourements. There is a plobal shontage of ESG sklls and experience. and times should not underestimate the complevity of the govenance aspect of this chalenge. wtich they will needed to meet in ender to deveriop coteria and expectations. 4. Remineration In a messure of hew crucial compenstion, remurentien, and good borus desgn is pweeved, the financial crisis, implementing supranational compensation standarst that sought is thive befler tisk-awse behaviors. Thet was Sepherter 2009, of course, and now, the FSB is cortruing to review the globel implementation and practical inpost. The FSBS severeh progese topont coven sectors and highlights uneven progess towarts implementing the princiles and stanterts, with banks seen to be reiatively more advansed then insurnce and asset noregenent frim. For more on this swipect you can see author Susarnah Hammonfts interiew here. Firms would be well adused to benchenak their opproach to conpensuton with the latest FSB progress repert. Thete as much granular detail on erwerging good and beber practicet, logether with an insight inte how firms are navigating certain legal chatenges, ans ce use of compersation to promote a sound culure and positive behaviors. 5. Enabling technobgies It is estimated that the pandemic acceierated digtal transfornation by as much as trve years. Digtal tanstormation is made postible by enabing lechnologes which induse applicition (specifically outsourcing to the doud). and distributed indger (bilodechan) technology. Firms and theie boards need to be able to ensure the safe and sound adoption dat any new technologes sa that the benetits can be reaped and the risks ariving from the adoption of mosative activites are groactively and apgropriately managed The ditical eiement is again povernance. Wethout approprately robuat corperate govensance. regulatoy issues are created thas impact boen the firm and senior indivaats. Gone are the days when the If function capable or not was trusted weth thing techelogical change. It is now a pre-sequisite tor beard members and serior maragars so have sufcient sechnoiogical knowiedge (or ready access to thar knowledge) to be abie to chaskenge and oversee a QUESTION FOUR Discuss in detail Corporate risk management