Keeping up with changing regulations was the top concern for U.S. financial services firms, according to Wolters Kluwer’s annual Regulatory and Risk Management Indicator survey. Fifty-nine percent said they were very concerned about their ability to manage risk across all lines of business, and a similar percentage were very concerned about maintaining compliance with changing regulations, according to the report.
Concern over new regulations jumped significantly from the previous year’s survey, moving from an index score of 67 to 114—a 47-point jump. Nearly seven in 10 firms (68%) expressed concern about the forthcoming Dodd-Frank Act Section 1071 rulemaking on the collection of small business lending data, which the CFPB is required to complete by March 31. Sixty-three percent were concerned about their ability to comply with Bank Secrecy Act/anti-money laundering rules, and a similar percentage were concerned with new beneficial ownership rules, the current expected credit loss standard, fair lending laws, UDAAP standards and Community Reinvestment Act rule changes. Fifty-seven percent expressed concern about state regulatory requirements.
Looking ahead over the next 12 months, 72%of firms saw cybersecurity risk as an area that will receive escalated priority, followed by credit risk and compliance risk (both at 51%), and operational risk and third-party risk at 27% and 26%, respectively. From an enterprise risk perspective, 73% said they were giving significant consideration to rising interest rates, followed by inflation concerns (63%) and ransomware attacks (60%).