• Risks in banking
•
• The need for senior management to be firmly in charge of their internet strategies;
• The effective management of security risks; and
• The reputational risks of rushing products to the market too early.
Strategic and business risk. Senior management needs to be firmly in charge of the direct effects of their Internet strategies, and of the potential indirect effects on the underlying profitability of their business
There is a risk that people with strong technological, but weak banking skills can end up driving e-initiatives. One consequence may be that these initiatives do not attract the types of customers that banks want or expect, and may have unexpected implications for existing business lines. Banks may face new competition too. E-banks are easy to set up, so lots of new entrants are arriving on the scene. And old-world systems, cultures and structures do not encumber these new entrants.
This, he said, was closely linked to business risk, key elements of which, such as the ability to assess credit and liquidity risk, present themselves in new guises in an e-banking world.
Security risk Banks have found little evidence of material success for hackers. This suggests that, for the moment, they have in place sufficiently robust barriers to repel attacks attempted on their gateways. However, he noted that:
While banks tend to have reasonable perimeter security, we have sometimes found insufficient segregation between internal systems, and poor internal security. So we are encouraging banks to look at the firewalls between their different systems to ensure adequate damage limitation should an external breach occur. As ever, t ...