Impact of IT Risk on a Forever Changing Environment
Branching off from a previous post “Does the Rise of Fintech Reflect the Future of Banking,” questions might arise as to the role of risk in this forever changing IT landscape.
Risk plays a role in all walks of life and influences how we operate, whether it is making a financial investment or choosing to travel to an unknown location. Every action can spur unknown events that will have an effect on the outcomes of an objective. With a changing environment, there are a lot of unknowns and the future of banking is no exception.
With all new ideas and decisions, there are unknown outcomes and technological solutions are no different. Risks need to be understood and a contingency needs to be put in place to mitigate any potential negative outcomes that might arise from a company’s decision to implement new solutions.
New technology companies in London provide applications for streamlining financial operations when implementing new IT solutions into existing banking infrastructure, there are risks. Whether it is implementing customer service, financial service, business process or compliance solutions… there can be unexpected happenings jeopardising internal IT systems, or worst of all negatively affecting clients. Because of this, risks need to be identified and mitigated in order to meet risk threshold standards and then to minimise any impact that a system error or outside threat may incur.
In the news this week Ulster Bank was fined £2.75 million by the Central Bank of Ireland for an error in 2012, which left 600,000 users unable to access their accounts. This was an IT error, that arose from a system update and potentially cost the company far more than £2.75 million due to a damaged reputation and the impact that this might have on a business. Cases like these exemplify how important it can be to mitigate risks and to have processes in place to minimise their impact.
Within all organisations, C level executives working on implementing solutions to will need to have processes in place to identify, assess and control any risk and to create contingency plans. They need to be able to understand the rewards that any decision may present, but also the threats that may arise in order to make the most rational decisions for their company. With the rising need to implement technological solutions in order to meet customer’s needs for practical, speedy and user-friendly services, banks will encounter plenty of risks and they need to ensure that their processes are in place to handle this change.
FinTech companies present new innovative solutions to existing financial needs and like the nature of all innovations, they have the potential to disrupt the banking industry and are changing the ways traditional financial institutions operate. However these technological solutions bring about new challenges and risks. The IT catastrophe’s highlighted in non executive training courses such as NED Course , wrongly implemented technological changes can cost companies millions of dollars and have disastrous effects on a business. However there is no reason why the gains won’t outweigh the negative effects if proper controls and actions are taken against risk. The future presents plenty of challenges to how banks will operate and risk evaluation and mitigation will have a large role to play in keeping companies on the right track to success.