Young Professionals Journal – Volume I, 2015

Never a dull day.  Changes in the regulatory landscape have stirred over-regulation concerns among institutions.  Be it as it may, financial institutions still need to plod through with meeting regulatory requirements and expectations.  CCAR stress testing results are now even capable of causing bank CEOs (and perhaps also along with other senior executives) to lose their jobs.  These developments are increasingly changing and re-shaping the industry.

While some of these changes are indeed very helpful for banks seeking the gold and platinum standard in governance and risk management, they are now considered just baseline requirements.  And this does not apply just to the larger banks, but also spilling over to the medium size and smaller banks.  Other financial institutions have not been spared either.  Securities brokers, asset managers, insurance companies, hedge funds, clearing houses, exchanges, payments institutions, and just about anyone who handles money for their clients in anyway are seeing regulations drive their business model.  Just consider MetLife – they have just been designated a SIFI.  That would dramatically change how they will be regulated.  One could continue to argue whether all these changes were really necessary, but one thing is sure, these will be here to stay for quite a while.

And while we think that’s enough challenges for banks and financial institutions, we are now seeing new threats from areas once perceived to be benign.  Cyber attacks and thefts are raising huge security concerns for financial institutions and corporations.  Of course, there are many more challenges, but we will touch on these two areas in this issue.

So, here in this issue, we bring some interesting thought leadership articles on these areas to share with our readers.  We present an interesting article by Peter Wallison on “The Regulators’ War on Shadow Banking” and Mayra Valladares’ take on “Why the ‘Too Big to Fail’ Problem Just Won’t Die”.  David Rowe, a frequent contributor to our publication also share his thoughts on whether it is time to breakup the too-big-to-fail institutions in his article “An Idea Whose Time Has Come?”.

On Cybersecurity, I thought it would be good to share some insight on the subject in my article “The Rise of Cyber Attacks and Threats – A Security Conversation”, which also highlights some of the findings in a recent Cyber Security Report by HP Security Research.  Frank Morisano also adds his thoughts on “Oversight & Governance of Cyber Threats & Risks”.  We are also very pleased to include Prof. Moorad Choudhry’s article on “Meeting the Challenge of Fit-for-Purpose Funds Transfer Pricing: A Business Best-Practice Guide”, for your reading pleasure.

We trust you will enjoy the compilation of articles in this issue.  Do send us your comments and suggestions via email to info@finrisk.org.  We encourage you to learn more about other FinRisk initiatives and activities at our website: www.finrisk.org.

 

Steven P. Lee
Chair, FinRisk Founding Committee