Future planning key for building resilience and reducing risk

At a recent seminar EY hosted in Jersey, Kirsty Mackay, Assurance Partner and leader of EY’s Channel Islands Extended Assurance service offerings, was joined by colleagues Jeff Shapiro and Michelle Acton-Phillips, a director and senior manager from EY’s Forensics & Integrity services team in London. They discussed some of the forces impacting the future of financial services, including new ways of communicating, ESG integration, cyber threats, information requests, and investigations and disputes, and how these challenges present opportunities for businesses to build resilience and integrity.

With a shift to hybrid and remote working, new ways of communicating and engaging with clients, particularly through messaging and chat applications, continue to cause issues for businesses. In the last two years, regulators have fined financial services organisations for using WhatsApp and other off-channel messaging platforms almost $2.5 billion in the US alone, so ensuring you have the correct policies and culture in place now is key to mitigating these risks.

Jeff explains: “Understanding the information you hold on your clients, how it’s utilised and the measures in place to protect it is of paramount importance. In addition to adhering to your organisations’ data policies, it's essential to ensure compliance with the policies specific to each jurisdiction where your business operates, as well as aligning with industry-specific regulations. While having robust policies is crucial for mitigating data risks, fostering the right culture amongst your employees that prioritises data awareness and responsible access is equally vital. This cultural aspect is essential in determining the whereabouts of data and the way it is accessed."

It is evident that investing in Environmental, Social, and Governance (ESG) is pivotal to the future growth of businesses. Bloomberg forecasts assets under management for ESG investments could reach an estimated $53 trillion by the end of 2025, while an increasing number of millennials now consider a prospective employer’s ESG commitments when looking for employment. However, the complex regulatory risks associated with ESG investing and the longer-term impacts of these are something businesses need to consider before making any commitments, as Michelle explains:

“As with any compliance or regulatory risk, it is so important to make sure you review all the risks associated with ESG investing and address them in a timely manner. We are seeing an increase in businesses who have made public statements about ESG now being reviewed and questioned on their data integrity in line with changing regulatory requirements and views. It is essential that the commitments being made are reflected in the business actions; aspirational statements need to be measurable.”

Kirsty concluded: “Businesses are encountering heightened regulatory scrutiny, especially in areas such as pricing, fair value, ESG and fraud. We strongly advise businesses to be prepared and plan for these changes while embracing the opportunities they represent. We can help our clients build resiliency while navigating the challenges in this competitive and regulated market, whether proactively addressing conduct and compliance, improving cyber security or responding to investigations, disputes and cyberattacks.”

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