Geopolitical risks will dominate the agenda for financial sector organisations, according to a survey carried out by Protecht. The survey, conducted in Summer amongst 400 UK-based companies, highlights current challenges around operational resilience, third party risk management, and the changing interface of customer relations and management.

The UK 2024 Financial Services Risk and Resilience Outlook shows that 26% of respondents view geopolitical events, including the aftermath of Russia’s invasion of Ukraine and tensions between the US and China, as the most critical risk area for the sector. This was followed by the risks presented by liquidity and access to capital – the top concern for 24%.

The survey also highlights the ongoing reliance on manual processes in risk management, with 24% of respondents using manual processing for control evaluation and monitoring, 22% for incident/loss event management, 21% for policy management and 21% for risk assessment.

The study also points to a shift in operational resilience, with 59% of organisations assigning significant budget to integrate operational resilience into their enterprise risk management frameworks.

Further, organisations seem cautious about the use of generative AI, with 35% in the UK saying that they are already using it but have limited or no plans to further expand its implementation over the next 12 months.

Another significant trend is the heightened focus on third party risk management. With over two-thirds (68%) of UK financial organisations planning to increase investment in TPRM solutions, the study reinforces the need for a more integrated and strategic approach to managing third party relationships, particularly in an era dominated by cloud-based services.

Commenting on the findings, Ben Lowing, risk and compliance director at First Central Group, said: “The Protecht survey provides a timely reminder to financial service organisations operating in a highly regulated environment of the scale, complexity and interconnectedness of the macroeconomic environment and the associated critical risk factors.

“In recent years First Central Group has gone through a very significant maturation of its enterprise risk management framework. In line with the key findings of the survey, we know it is imperative to invest in digitalised interconnected ERM frameworks and prioritise rigorous risk testing and processes. Financial organisations must be well prepared for the indeterminate geopolitical challenges ahead and ensure their third party risk management systems can meet the evolving regulatory landscape.”

Gary Lynam, managing director EMEA at Protecht, added: “This survey paints a picture of a financial services industry at a crossroads, with technology playing a pivotal role in navigating these changes. Firms are increasingly seeking to align risk management disciplines with technological advancements to build sustainable, resilient, and efficient operational frameworks. We urge organisations to embrace these technology-led changes to not only mitigate risks but also to harness new opportunities for growth and innovation.”

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