Protecht, a leader in risk and resilience software, has announced the findings of its UK 2024 Financial Services Risk and Resilience Outlook research. The comprehensive survey, conducted amongst 400 key UK financial organisations, reveals an industry landscape increasingly impacted by geopolitical risks, significant investment in operational resilience and the major opportunities presented by technological and data strategy alignment across the sector.
The survey, conducted across UK financial organisations of between 250-5000 employees, reveals that 26% of respondents view geopolitical events, including the aftermath of Russia’s invasion of Ukraine and tensions between the US and China, as the most critical risk area for the sector. This was followed by the risks presented by liquidity and access to capital, which was the top concern for 24%.
Tsambika Jeffries, VP, Enterprise Operational and Financial Risk, Zepz, said: “The findings of the report do resonate for firms like ours; geopolitical uncertainty can impact us around the globe and operational resilience has been a key area of focus. As a FinTech, we embrace new technology and are constantly striving to find ways to increase automation and efficiency. The benefits of AI could be considerable, as long as risks are carefully managed.”
A further key finding of the report is the strategic advantage that financial organisations can gain through aligning their technology and data strategies. In particular, the survey highlights the on-going reliance on manual processes in risk management, with 24% of respondents using manual processing for control evaluation and monitoring, 22% for incident/loss event management, 21% for policy management and 21% for risk assessment. This reveals the potential for digitalisation to enhance efficiency and compliance, particularly in light of new regulations such as the UK’s emerging climate change rules and the global standard for sustainability reporting.
Looking further at the role of technology, financial organisations seem cautious about the use of Generative AI, with 35% in the UK saying that they are already using it but have limited or no plans to further expand its implementation over the next 12 months.
The study also points to a shift in operational resilience, with 59% of organisations assigning significant budget to integrate operational resilience into their enterprise risk management frameworks. This reflects a proactive approach to risk management, moving from a reactive stance to an anticipatory one, acknowledging that disruption is not a matter of ‘if’ but ‘when’.
Another significant trend is the heightened focus on third party risk management (TPRM). With over two-thirds (68%) of UK financial organisations planning to increase investment in TPRM solutions, the study reinforces the need for a more integrated and strategic approach to managing third party relationships, particularly in an era dominated by cloud-based services.
“This survey paints a picture of a financial services industry at a crossroads, with technology playing a pivotal role in navigating these changes,” said Gary Lynam, Managing Director EMEA at Protecht. “Firms are increasingly seeking to align risk management disciplines with technological advancements to build sustainable, resilient and efficient operational frameworks. We urge organisations to embrace these technology-led changes to not only mitigate risks but also to harness new opportunities for growth and innovation.”