• Regulators focus on stability during the COVID-19 pandemic
• Banks have launched more digital initiatives to improve risk control and efficiency
• Leading risk management practices embody technology-driven prevention efforts

While financial and non-financial sources of risk continually shape risk management decision-making, the dramatic effects of COVID-19 on the banking industry will test the operational resilience and agility of banks. There are significant learnings from the Global Financial Crisis in 2007 to 2009 that can help complement industry efforts on shoring up capital to strengthen balance sheets with a particular emphasis on improving credit quality. Similarly, emerging digital fraud will also require robust security protection and governance practices to protect customer data and trust which are essentially any bank’s most precious assets. 

Regulators focus on stability during the COVID-19 pandemic

Instilling trust in the strength and resilience of the banking industry has become a dominant focus for regulators. Banks must continue to improve the quality and efficiency of regulatory compliance by working in collaboration with regulators to achieve both financial and operational stability. Achieving this will require finding leaner and smarter ways to manage evolving sources of risk.

For instance, the Australian Prudential Regulation Authority’s (APRA) emphasis has been on operational and financial resilience. Bank Indonesia undertakes an accommodative macroprudential policy. The People’s Bank of China reinforces policy flexibility to support the broader economic recovery. The consistent underlying thrust of regulators has been one of providing an enabling environment for stability as banks grapple with multiple risks and threats.   

Banks have launched more digital initiatives to improve risk control and efficiency across the en...