Operational Risk Horizon 2020
- 10 February 2020
Discover the top operational risks for 2020 and beyond
Identifying which risks you need to be most aware of can be one of the biggest challenges facing operational risk professionals. The ORX Operational Risk Horizon study does the hard work you.
We've surveyed over 45 financial firms based around the world to find out which risks are top of their agenda for 2020, and which they think will have the most impact in the next three years. From this information, we've identified and analysed the top current and emerging operational risks.
Download the free summary report to see which operational risks made the top five current and emerging risks and to read our analysis of the key themes. If your firm is a member of ORX then you can get the full Operational Risk Horizon report as part of your ORX Membership subscription. The full report is available on our member-only website – please contact [email protected] if you're having problems accessing it.
The operational risk horizon in 2020
The impact of digitalisation continues to grow
The changes that the world has experienced over the last 10 years have been enormous, and the financial services industry has not been immune. In fact, many would say that it has been at the forefront of this transformation.
Digitalisation is affecting all aspects of life, and its impact has reached across the operational risk landscape. In the face of this, it's difficult to define, understand and then manage the risks your firm is now facing.
The view from the industry
To help you with this challenge, we survey our membership annually to see which risks they think will be top of the agenda for the coming year. We also ask them which risks they think will be the key emerging risks over the next three years.
Over 45 financial institutions took part in the 2020 study, from both the banking and insurance sectors. In total, we analysed 412 current risks and 281 emerging risks to create this report.
Climate change, AI and resilience key themes in 2020
This year, we've changed our approach to meet the developing requirements of operational risk management. Instead of just looking at the risks individually, we have also considered the key themes that were apparent in the study – climate change, AI and resilience. Each of these areas is analysed in-depth in the 'Risks in focus' section of the report.
Information security & cyber top current op risk
Not surprisingly, information security and cyber remained the top risk for 2020. Our participants focused on a wide range of issues, from business disruption and malicious attacks to data protection and innovation.
Geopolitical & macroeconomic leads the emerging risks
This year, geopolitical and macroeconomic risk rose to become the highest-ranked emerging risk. Escalating geopolitical tensions and a lack of confidence in the macroeconomy have pushed it to top spot, with many survey responses presenting a picture of a world that is teetering on the edge of a crisis as the financial services industry is buffeted from all angles.
Climate change risks come to the fore
Public pressure and regulatory attention, such as the Bank of England’s paper on climate change, have made climate a key issue. Firms' submissions focus on the physical risks as well as the risks associated with transitioning to a lower carbon economy.
Digital disruption loses top emerging risk spot
After coming first last year, in the 2020 Operational Risk Horizon digital disruption dropped to second in the emerging risks list. Despite this, it still remains a key concern, and the effects of digitalisation on the risk environment can be seen throughout all of the risk categories we analysed.
Risks are becoming more interconnected
The interconnectedness of risks, driven by digitalisation, is rendering traditional risk categorisations unhelpful to understand and manage risk. Many of the concerns highlighted in the report this year are thematic, cutting across multiple traditional risk categories. The 'Risks in focus' section looks at three key risk themes in more detail, examining the risk categories they affect.