CHANGE IN YEAR - the 8 x risks20 Apr 2020 17:21
1. Credit Risk - CHANGE IN YEAR
There have been no changes to the risk level during 2019.
2. Operational Risk - CHANGE IN YEAR
Operational risk has increased during the year. The change in delivery pipeline in 2019 contained remediation, regulatory and mandatory change, and exciting developments for the SME marketplace using the C&I funds. This volume of change has heightened both the change delivery risk, and the ability of business areas to absorb large amounts of change into their processes. These risks are being activity managed through our change risk frameworks and reported through governance. As operational resilience, fraud and cyber security threats continue to evolve and affect the banking industry, we continue to monitor and manage these to appetite.
3. Liquidity and funding Risk - CHANGE IN YEAR
Liquidity and funding risk has increased during the year owing to deposit outflows experienced prior to our equity capital raise, increased competition in the deposit market, and higher volatility of large commercial deposits. Additionally, in 2020 we expect the impact of COVID-19 to have a negative effect, however given the inherent uncertainty over the length and scale of the pandemic it is too early to fully evaluate the impact of the situation.
4. Market Risk - CHANGE IN YEAR
There have been no changes to the risk level during 2019. Market volatility has increased during the start of 2020, driven by global economic uncertainty resulting from the COVID-19 pandemic.
5. Financial crime risk - CHANGE IN YEAR
Financial crime risk has increased during the year due to changes to global sanctions and obligations with which we must comply.
6. Regulatory Risk - CHANGE IN YEAR
The range and complexity of regulations with which we are required to comply has increased, and this continues into 2020. During 2019, several key initiatives to implement regulatory changes were significantly progressed or completed. Notably, these included PSD2, High Cost of Credit and Annual Statement of Fees, alongside the implementation of new measures required by the Competition and Markets Authority ('CMA').
Our culture, built on transparency, fairness and customer focus, sits at the heart of how we deliver our vision and strategy, and this is implicit in our approach to delivering regulatory change. It is the essence of who we are, and it helps us to meet our legal and regulatory commitments.
7. Conduct Risk - CHANGE IN YEAR
Conduct risk has increased in 2019, driven by changes to complaints handling processes relating to fraud and social engineering, and an increase in compensation for fraud instances.
8. Model Risk - CHANGE IN YEAR
There have been no changes to the risk level during 2019.
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