FINANCIAL SERVICES

Financial Services

FINANCIAL SERVICES

 

To supplement the 10 questions provided in Issue 128 of Board Perspectives: Risk Oversight, the following additional questions are offered to directors serving on boards of financial services institutions:

  1. Given that emerging regulatory expectations related to operational resiliency were already a hot topic pre-COVID-19, how did our resilience plans fare during the pandemic, and what lessons learned are we incorporating into our Resilience 2.0 programme?

     
  2. Considering that many functions for which it once would have been unthinkable to work remotely (e.g., trading desks, call centers) did so during the crisis with very little advance planning:
    • What have we learned from this experience, and should a larger percentage of our employee base move to a permanent flexible work model in the future?
    • What infrastructure investments do we need to make to enable flexible workforce options in an efficient and secure manner?
  3. What impacts did we experience from offshore service providers slowing or ceasing operations during the pandemic, and should that cause us to change our outsourcing and/or offshoring strategies in the future?

     
  4. Given the potential for continued self-isolation at home and its impact, from a customer perspective, on the manner in which people work and procure services, are there any aspects of our operations and business model that could require significant refinements in the future (e.g., increased emphasis on online banking, increased desire for contactless purchases in retail outlets, decreased use of ATMs, and use of videoconferencing)?

     
  5. With forward economic conditions highly uncertain, and with arguably equal risk of deflation and long-term near-zero rates, versus eventual currency devaluation and significant inflation:
    • Have we evaluated alternative scenarios to better understand the opportunities and vulnerabilities we face, depending on how the future plays out?
    • Given the analysis of alternative scenarios, what outcome do we expect to be most likely to develop, and how would that outcome impact our results?
    • If the alternative outcome turns out to be the correct one, how have we hedged against that possibility?
  6. How well did our credit loss and other forecasting models fare during COVID-19? Do we need to broaden the set of variables or scenarios we incorporate into these models going forward in light of what we’ve learned?

     
  7. Do we have good data on our credit and/or market risk exposure by industry sector, and have we effectively analysed the impacts of possible future events (e.g., a second wave of lockdowns or the possibility of additional governmental lending or other support programmes) on the sectors that have been most impacted by the pandemic?

     
  8. Many of the programmes and initiatives that required us to respond during the crisis (for example, the Paycheck Protection Programme, foreclosure and collections moratoria, and refunds of auto insurance premiums) were developed and executed in a fraction of the time we would typically take to ensure such efforts were well-controlled. What operational risk or compliance breakdowns might have occurred as a result, and should we conduct a lookback review of these programmes to fix any customer harm caused before it becomes a regulatory matter?

     
  9. Have we effectively cataloged all of the above-and-beyond steps we took as an enterprise to help our people, clients and communities during the crisis, and have we planned how – in an appropriate way – we can take credit for those actions through normal disclosure channels or other means, as it relates to the Community Reinvestment Act, investor expectations related to ESG, etc.? 

 

Microsite Download View: 

Board Perspectives: Risk Oversight

Board Perspectives Promo Hero