Risk.Net releases Top 10 operational risks for 2019
Risk.Net has released its annual ranking for the biggest operational risks for the year ahead, based on a survey of operational risk practitioners across the globe and in-depth interviews with a selection of industry personnel:
- Data Compromise is at the top of the survey. Several factors are contributing to this risk, including the potential costs associated with increased regulation, such as compliance with the EU’s GDPR.
- The top three predicted areas of operational risk are all IT related:
- Data Compromise
- IT Disruption
- IT Failure
- Theft and Fraud comes in at number 5 - perhaps unsurprising given that the top three of 2018’s biggest publicly reported operational risk losses of 2018 were the result of internal fraud.
- Regulatory Risk is ranked at number 7. Last year saw widespread investigations into AML failures in particular and action by regulators does not seem to be decreasing.
Lloyd’s of London suffers second consecutive year of losses
Lloyd’s syndicates were hit by a range of natural disasters in 2018 as the insurance market reported a GBP1bn loss for 2018, against a GBP2bn loss the previous year. The market said that it incurred GBP2.9bn of costs from major claims, a big increase from the long-term average of GBP1.9bn. Such major claims included hurricanes Florence and Michael in the US, as well as Typhoon Jebi in Japan and wildfires in California. The insurance market has been remarkably resilient in absorbing losses in recent years, however there are signs that rates are increasing for several classes of business.
Source: https://www.lloyds.com/news-and-risk-insight/press-releases/2019/03/lloyds-reports-aggregated-market-results-for-2018
UK regulators continue to be pro-active
Recent reports indicate that the regulatory landscape in the UK continues to harden as 2017/18 saw the Financial Conduct Authority open more enforcement investigations than ever before – 504 in total, up from 410. Directors’ and Officers’ (D&O) insurance is an essential in protecting individuals where they are subject to non-routine regulatory investigations. Further, Professional Indemnity insurance can respond where the corporate entity itself is subject to investigations in connection with its provision of services.
Source: https://www.fca.org.uk/publication/corporate/annual-report-2017-18-enforcement-performance.pdf
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