Addressing all stages of the risk lifecycle in financial services

Smiling business man using a tablet.There’s never been a more complex time for financial services firms to try and manage risk. From an expanding range of cyberthreats, such as ransomware and third-party vulnerabilities, to business and operational risks such as regulatory compliance and data security, companies need to be more aggressive than ever in reducing risk, in all its forms.

Yet, while financial services organizations need to eliminate as much risk as possible, they are facing rapidly changing markets that are in the middle of digital transformations, filled with new possibilities for engaging with customers and delivering new services but also opening up new risks. As financial platforms and services expand their reach to integrate with all aspects of a customer’s life, the result is the generation of even more data and even greater needs for security, privacy, and trust.

At the same time, more and more financial services companies are moving data and offerings to the cloud, introducing yet another set of risk management considerations.

But these challenges shouldn’t hold back innovation. While companies can’t completely eliminate risk, they can manage it more effectively, efficiently, and maybe even more profitably. That’s why Microsoft has been so intent on helping to drive and support innovations that help reduce risk. In addition, Microsoft partners who work with solutions for the banking, capital markets, and insurance industries have also made risk reduction a key focus.

While the landscape of risks facing financial services companies is always changing, Microsoft and its partners offer platforms and solutions with risk reduction functionality to address all stages of the risk lifecycle. By using the right solutions, organizations can not only reduce business, operational, and cyber risks, but they can enable greater agility and faster and more creative responses to changing market conditions.

Current risk trends in financial services

In banking and capital markets, companies need to be able to effectively consume and manage the huge amounts of internal and external data needed for accurate risk calculations. They need end-to-end security for all systems, and ways to stay ahead of evolving regulatory and compliance requirements.

In insurance, companies need the ability to run models faster and more often to gain better understanding of risk profiles. They need to be able to use AI to improve risk insight, capital adequacy, and reservicing across lines of business. At the same time, organizations are striving to reduce the time required for financial reporting processes and responding to evolving regulatory requirements.

And, of course, they need strong data protection and privacy controls to meet customer expectations and regulatory requirements, as well as safe and effective ways of working with huge volumes of data spread across multiple cloud and on-premises data sources.

Managing risk in action

Reducing risk isn’t just about identifying potential problems. The right risk reduction platforms and solutions can enable organizations to reduce threats and risks while giving them the confidence and capabilities to deliver safer, more reliable, and even innovative solutions to their customers.

To understand how this works, let’s look at how a few companies have used robust and secure platforms from Microsoft, including Azure, to create solutions for banking, capital markets, and insurance that help reduce risk while delivering strategic benefits.

  • Detecting cyber risk. Fraud, malware, and online scams are everywhere today, yet financial services organizations can’t let that hold them back from enabling more powerful solutions for their customers. For example, a top five UK bank had identified a growing risk of voice scams, known as Authorized Push Payments (APP) fraud, that were costing hundreds of thousands of dollars per month. Instead of limiting functionality to its customers, the bank deployed a BioCatch fraud solution that used Azure AI to analyze digital behavior and neutralize threats. The solution was able to differentiate in real time between legitimate, authorized users and cyber-criminals to reduce risk across the entire organization.
  • Staying ahead of fraud by accelerating time to market. The faster organizations can address potential fraud, the less money they lose, the fewer compliance problems they generate, and the better they meet or exceed customer expectations. For example, Everlink Payment Services of Canada used ACI Fraud Management by ACI Worldwide to roll out new fraud detection models in a single day using the Microsoft Azure Marketplace for automated deployment. ACI’s underlying machine learning and analytics enable financial services organizations to meet evolving customer expectations while also enabling secure and seamless digital payments. Within its solution, it offers effortless scoring services that allow financial institutions to keep up with the changing payments landscape.
  • Ensuring regulatory compliance while reducing risk. For insurance companies, staying compliant is a critical component of risk reduction. In fact, financial crimes such as money laundering or funding illegal activities is a growing issue in this sector. Unfortunately, these types of crimes can be hard to spot with traditional approaches. To help reduce fraud while ensuring compliance, Shift’s Financial Crime Detection solution uses Azure AI to flag suspicious transactions and individuals and help insurance investigators identify crimes and strengthen compliance.

The benefits of proactively managing risk

For financial services institutions, risk management doesn’t have to be a sunk cost. With the right combination of solutions and experts, companies can achieve two important goals: manage risk, and also increase corporate agility, responsiveness, and competitive advantage.

Microsoft solutions from platforms and services such as Azure, to offerings from Microsoft partners such as ACI Worldwide, Shift, and BioCatch, support some of the most prevalent forms of risk that financial institutions face. No matter what your organization’s specific risk issue may be, there’s a solution from Microsoft or its financial services partners that will help you manage risk more effectively and efficiently.