The landscape for Asian risk regulation implementation is on the move. Ana-Luiza Olanescu, Editor-in-Chief, RiskMinds Asia, gives six points of progression that will be at the forefront of everyone's minds at RiskMinds Asia from 9-11 October.
1. Rapid development of information technology
Asian banks are waking up to the rapid development of information technology, especially the internet, which has led to the drop of trading costs and accelerated the globalization process of the securities market. Because of the globalization trend of the securities market it is necessary for the regulators to pay particular attention to risk regulation, ensure the provision of good financial services to consumers, protect consumer interests and boost their confidence in the market.
2. Cyber Security
Cyber security is on everyone’s priority list. But not everyone knows how to deal with the technical side of it and how you can educate your users. It is essential to motivate the general public to be part of the security element, which is why at RiskMinds Asia we will be taking about taking cyber security to the next level by educating your users. A lot of the times it is not the technology but the user behind it that can open the door to threat. How aware are your users?
The regulatory landscape is keeping risk managers busy as Basel IV proposes to modify the ways banks calculate operational risk, such as those from cyber-crimes and IT glitches. Some of the latest Basel Committee proposals on further adjusting the capital rules can potentially lead to additional significant increases in overall capital requirements, which we understand is not the committee’s intention. At RiskMinds Asia we will address potential unintended consequences of the proposed adjustments, including those on the real economy.
4. IFRS 9
One of the big topics on the Asian financial market is new accounting standard, IFRS 9 and how it impacts the different parts of risk (credit and market. Leading Asian banks will be discussing how to get ahead with IFRS 9, what they have adopted already and how they stay ahead of the regulatory game.
Another issue on the horizon is FRTB, this will be live by 2019. FRTB compliance will significantly increase the capital required, leaving many firms to assess whether business lines are still viable after factoring in these additional costs. There is a lot of scrutiny around FRTB, as it is believed it would push dealers to focus on high yield assets and put all their liquidity there, which will lead the market into the same risk areas and force clients to pay more for hedging risk. Therefore, FRTB’s standardized approach could be flawed, so at RiskMinds Asia we will debate on what approach is suitable going forward.
6. The future of risk management
The future of risk management is moving from a more process oriented and compliance risk management framework to a risk based/model based approach to generate business decisions and concrete actions, rather than just reporting and complying. This transformation of the risk function is probably under enforcement in many companies, but not yet understood by stakeholders and management board. This repositioning of the function and data and analytical skills required constitute a challenge, and as risk managers we will come together at RiskMinds Asia in Singapore to determine what the best strategy is going forward.