The COVID-19 pandemic highlights the need for FIs to make risk management more efficient, insightful, flexible and strategic.
Fallout from the COVID-19 pandemic has created new ways for risks to emerge and introduced new challenges to how financial institutions (FIs) manage risk. Customers and remote employees alike have rapidly embraced new digital technologies. Rescue programs like the CARES Act have required FIs to deploy new services at an accelerated pace, while new societal pressures mandate that FIs support the recovery and work with financially distressed borrowers in a compassionate manner. At the same time, FIs face new cost and regulatory pressures in a difficult economic environment.
This is a different set of challenges from the financial crisis of 2008, which began, in part, as a breakdown of risk management in the financial sector and splintered into other areas. In response, FIs operating under tough regulatory pressures spared little expense adding layers of controls to address specific perceived risk management failures.