Covering Disruptive Technology Powering Business in The Digital Age

Written by: Khairul Haqeem, Journalist, AOPG.

Imagine this: A robber strolls into a bank, casually bypasses the tellers, and strides straight into the vault. He gets the cash, walks out the door, and doesn’t look back. There are no alarms, no security guards, not even a bank manager trying frantically to stop the heist. Just like that, the robber is gone—unscathed but with the bank’s money already in his possession.

Think about that scenario for a minute. Would you believe that the same scenario can happen in the digital realm?

The money in this case is data, and it is kept in a vault that is an organisation’s database. The robber is a cybercriminal—potentially living nearby or a few thousand miles away—and his means of entry to this trove of all-important data is any attack vector in that organisation’s digital infrastructure.

Christopher Ghenne, an authority in SAS compliance solutions with more than 17 years of experience in combating anti-money laundering, recently took time out to provide Cybersecurity ASEAN with an insider’s perspective on the emerging landscape of operational risk in the financial sector—the kind that makes the foregoing scenario a nightmarish reality for some unfortunate financial institutions.

A Byte of the Banking Future

In the cruellest of ironies, the digital mechanisms making transactions easier, faster, and more convenient might also be putting financial institutions more vulnerable to nefarious individuals looking to gain profit illicitly.

Consider, for instance, how physical cash transactions are becoming the fossils of finance. While it may be making life easier, the risks the cashless revolution is opening up have increased and are evolving—ironically putting the assets of the institution and its customers at risk. And yet banks and financial institutions are continuing to innovate at warp speed to offer better, faster, and more convenient services, even as cybercriminals appear to be doing the same.

Of course, the trade-off is for the most part purely unintentional, according to Ghenne.

“In our pursuit of a cashless society, we’ve inadvertently opened the floodgates to new-age bandits,” Ghenne pointed out. “Cybersecurity threats, data breaches, and regulatory fines have become our new normals.”

The Cyber Tightrope

But it’s not all doom and gloom. Walking the fine line between innovation and security is certainly a challenge, but not an impossible one. As our banks become increasingly tech-savvy, the tools they utilise to protect their assets are evolving just the same.

“Think of it as an arms race. As risks become more sophisticated, so do our mitigation measures,” Ghenne said about the seeming cat-and-mouse game occurring between financial institutions and cybercriminals—one where each side continuously tries to stay ahead of the other.

For instance, advanced analytics and Artificial Intelligence (AI) are revolutionising the risk management process, providing a real-time line of defence against potential threats. Then again, a formidable defence against cyber threats is not just about having the best technologies available. It is also about the people who are actually using it. This is why Ghenne emphasises the importance of ongoing education:

“Our IT personnel need to keep their fingers on the industry’s pulse,” he explained. “And we must equip our customers with the best practices to guard their own financial fortresses.”

Unmasking the Invisible Enemy With Visibility

To navigate a vast, complex, and threat-filled financial landscape, banks must have the visibility of a hawk to be able to spot every vulnerability no matter how minute. Machine learning and AI can help in this regard, offering a comprehensive view of bank operations and unmasking vulnerabilities that could otherwise fly under the radar.

“Our modernisation efforts don’t just focus on deploying new tech,” assured Ghenne. “We’re working towards crafting proactive strategies based on historical business activity data. This way, we can anticipate future scenarios and intervene before a risk matures into a reality.”

Stress Tests and Scenario Plots: A Banking Blockbuster

It goes without saying then that being ahead of the curve is paramount given these ever-increasing and ever-evolving operational risks. And it is in this context that Ghenne highlighted the pressing need for stress testing and scenario-based analytics, noting how “these techniques allow us to play out potential scenarios and take action before a spark becomes a fire.”

But with an arsenal of advanced tools at their disposal, how can financial institutions effectively use these for risk management? The answer, Ghenne explained, lies in leveraging data and optimising resource allocation based on liquidity.

“Our capabilities are a ‘must-have’ for an effective risk management lifecycle. The goal isn’t just to meet complex regulatory demands and industry standards, but to go beyond, exceeding expectations every step of the way,” he said.

Risk Management 2.0

Ultimately, one thing becomes crystal clear: In this digital era, risk is not a static concept. It mutates, it evolves, and it weaves itself into the very fabric of innovation. But risks per se are not unbeatable. Rather, they are challenges that can be managed and/or mitigated.

Indeed, a new age of operational risk management is dawning, and it is marked by game-changing technologies such as AI, advanced analytics, and predictive modelling. It is a fascinating fusion of human and machine, traditional and modern, risk and innovation.

And as financial institutions march towards the new age, it is fair to worry about this cautionary tale of digital doom. But they must also realise that the future is full of opportunities for growth, resilience, and technological triumph. With industry veterans like Ghenne, players in the financial services sector can be equipped to not only survive this new frontier but also conquer it.

In this way, no one and nothing can ever waltz into your digital realm and take anything away.

(0)(0)