There can be many powerful takeaways to be found in the financial institution business model. Managing financial risk is one of the cornerstones of successful financial organizations – these include credit risk, market risk, along with funding and liquidity risk. The school of thought around these fundamental approaches is that risks can be quantified and used as equity-capital buffers that are held by banks to offset potential losses.
On the other hand, nonfinancial risks within the finance industry are mostly related to operations and tend to mirror the same threats faced by companies outside the sector. Many of these organizations have developed strategies to deal with nonfinancial risk while incorporating many of the same approaches used by banks to manage financial risk – which corporates also deal with. With the understanding that this can be a two-way street, it’s likely that the finance industry can learn from the corporate business world when it comes to managing nonfinancial risk.
For example, at the top of the cross-industry comparison list would be digitization and its associated risks – particularly as it pertains to the banking sector. With the digitization of a financial business model, new challenges will emerge including cyber-risks, IT delivery, business continuity and risk associated with the incorporation of AI. From a technology standpoint, the corporate sector has a lot to share. Another comparison point to consider: along with telecommunications, transport and energy, banking would be considered a highly critical infrastructure. The analysis of how these other sectors manage critical infrastructure could be of great benefit to the finance industry.
One of the most important takeaways when comparing the risk management approaches of the various sectors, however, is the importance of resilience. Whether analyzing the airline industry – where safety is paramount – or the telecommunications sector – where stability is of the utmost value – or the automotive industry, where outsourcing and supply chain are critical factors – resilience looms as the key to success…it’s literally survival of the fittest (and the fastest).
Looking back at our comparison between corporates and banks, it’s clear that resilience factors heavily into risk-specific control approaches. Experiences extracted from specific corporate industries can actually provide useful guidance and controls to the financial sector, and it’s clear that in 2022, resilience is as much the new risk-management paradigm for corporates as it is for banks. Particularly coming out of a global pandemic, many companies that have been blindsided by risk events that seemingly come out of the blue need to look to more timely reporting, detailed assessments, and awareness of important and emerging trends. These are some of the strategic elements of true business resilience.
Whether rooted in the financial or corporate sector, businesses can maximize their resilience initiatives by partnering with one of the leading BPO outsourcing companies. Anexa is an award-winning outsourcing pioneer that has set the gold standard in customer service and CX, along with key non-core processes that can drain a company’s focus and efficiency. As an accredited industry leader, Anexa can pick up the virtual pieces and manage as much, or as little of your business activities as you need, while you’re figuring out how to recreate and re-establish your critical business practices in a post-pandemic world.