EVOLUTION OF FINANCE
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of Asian transactions – nearly as much as US and UK banks combined. Since 2010 there has been a significant increase in issuance volume from China (including Hong Kong), the Association of Southeast Asian Nations, and India. This growth looks set to continue.
// AUDIT STAFF GOING AROUND FIRMS DOCUMENTING ALL THE CONTROLS THAT SUPPORTED THE FINANCIAL STATEMENTS WAS A GAME CHANGER //
Operations and Risk In 1992, operational risk management for most of the financial services sector was limited to disaster recovery or business continuity, says Simon Tweddle, founder of the management consultancy Risk Shapes. “Over the next decade the euro came
in and we had to deal with Y2K [the risk of computer errors when the year changed from 1999 to 2000, requiring software patches to ensure systems, including financial databases, remained intact], but the fundamentals of risk management didn’t really change,” he says. “It could be said that operational risk management was born with the Sarbanes–Oxley Act of 2002 [US law around reporting and recordkeeping]. Audit staff going around firms documenting all the controls that supported the financial statements was a game changer for those who wanted to pursue a career as operational risk managers.”
Over the following 20 years, hundreds
of textbooks were written and operational risk started to become a technical discipline using quantitative models like those previously used for portfolio market and credit risk measures such as value-at- risk or VAR. But it could be argued that the
global financial crisis and the subsequent eurozone crisis prove that risk management techniques cannot have evolved that much if we continue to have the same crisis repeatedly, says Simon. “However, what has certainly changed is the sector’s attitude to risk management. It used to be the case that senior people in the business would say ‘that will never happen’ – they don’t do that anymore,” he says. Another significant change he’s seen is
an increase in operational risk management responsibilities across all departments within a firm. “The more the sector sees operational risk management as a set of holistic activities performed by everyone, the more success firms will have managing their operational risks.” Over the coming years, Simon expects to see adoption of machine learning across risk disciplines beyond trading, cyber, and compliance surveillance.
CISI WEALTH MANAGEMENT FORUM Chaired by: Hamish Warnock ACSI, partner launch lead at Seccl, which provides the technology to allow wealth managers to set up and launch their own investment platform
For Hamish, key wealth management developments over the past 30 years include the advent of fund supermarkets (pioneered by discount brokers Charles Schwab & Co and Fidelity Investments in 1992) and latterly platforms (first introduced by TD Ameritrade
in 2004), which “have dramatically changed how and through which wrappers an adviser would look to grow a client’s assets”.
Commenting on the mix of future priority skills identified in the Future skills framework, Hamish says that adaptability (defined by the report as having the skills and willingness to adapt at pace to changing circumstances and environments, being comfortable with ambiguity, maintaining personal resilience, and learning from experience) and user experience have become even more important post- pandemic as more client interaction have moved into the virtual world.
“As part of my role, we’re also helping to shape this year’s Global Wealth Summit. After a tremendous event last year, we’ll be revisiting a series of coordinated online events
from across London, the Middle East, Africa, and China to gain some real insights from a truly global set of keynote speakers and panel participants,” says Hamish.
“The event really shows the far-reaching benefits of being a CISI member, with several hundred viewers taking part live and thousands watching on CISI TV afterwards, and I can’t wait to take part.”
Looking ahead, he expects the use of application programming interfaces in the wealth management sector will continue to grow as firms recognise the value of allowing systems to talk to each other and share information.
“Another area I would highlight is the advice gap – reducing costs, integrating technology, and opening up wealth management to the masses are issues we should keep front and centre, especially considering the ‘great wealth transfer’ to come over the next decade or so,” he says.
To help members keep their skill sets up to date and relevant, the forum closely follows the exams and learning opportunities created by the Institute, providing input and events on topics which it thinks are relevant and/or needed.
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THE REVIEW SEPTEMBER 2022
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