Enhancing Focus on Risk Management and Consumer Protection

Over the past year, regulatory agencies, financial services management teams and board members have had to increase their focus on effective risk management practices.  That focus will continue to grow and evolve and must include an emphasis on consumer protection.

Financial services management teams are not only expected to ensure compliance with regulatory requirements but also to improve internal risk management practices to help identify and remediate weaknesses in a timely manner.  They must reassess the state of their operations surrounding governance, risk management policies and procedures, systems in place, and internal controls and frameworks.

Strategies to help enhance risk management practices include:

• Establish dedicated risk committees and organize training sessions on risk management
  • Review current policies and mitigation strategies and provide education about consumer rights, compliance requirements and fraud prevention
• Conduct comprehensive scenario analyses to identify potential risks
  • Assess the impact of economic downturns, cybersecurity breaches and regulatory changes
• Perform stress testing to evaluate resilience and identify vulnerabilities
  • Test loan portfolios against sudden market shocks or rising interest rates
• Utilize data analytics to monitor metrics in real time
  • Track operational risk incidents, credit risk exposures and liquidity ratios

Strategies to help enhance consumer protection include:

• Ensure that financial products and services align with consumer needs
  • Provide clear disclosures, conduct suitability assessments and incorporate changes based on market dynamics
• Establish transparency in pricing and rates
  • Empower consumers with clear information, simplify product documentation and terms, and disclose charges and penalties upfront
• Proactively identify consumer risks
  • Prioritize supervision based on risk exposure, monitor compliance with consumer protection regulations and conduct targeted reviews/audits
• Ensure effective oversight with consumer protection in mind
  • Establish robust governance frameworks and Key Performance Indicators (KPIs), involve compliance and legal in product/service development, and monitor consumer complaints and feedback

Risk management and consumer protection are critical pillars for maintaining trust, stability and growth.  Financial services institutions must proactively address these areas to safeguard their reputation, comply with regulations and ensure positive customer experiences.

About Schneider Downs Risk Advisory 

Schneider Downs’ team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business.  

To learn more, visit our dedicated Risk Advisory and IT Risk Advisory page.