Wolters Kluwer Financial Services has identified seven key risk management areas it believes organizations should pay attention to in the next 12 months.

The company says it made its selection after attending several events designed for operational risk management professionals, including the OpRisk North America and Risk Management Association conferences. During these events, Wolters Kluwer Financial Services’ experts participated in a round of in-depth discussions with several top-tier financial institutions to uncover emerging operational risk issues, according to a company statement.

Based on those discussions, here are the top challenges operational risk professionals are facing in today’s financial services environment:

1. Risk Appetite Definition and Measurement: Many financial institutions are undergoing a transformation around how they measure and monitor risk at the highest levels. Many have completed their board-defined risk appetite statements and are now implementing programs to measure how well the organization is adhering to that appetite.
2. Three Lines of Defense Re-examination and Organizational Structure: Largely driven by the heightened standards published in January 2014 by the Office of the Comptroller of the Currency, organizations are re-examining how their departments align and work together across the business to manage risk.
3. Regulatory Change Management: With the high volume of regulatory change at both the federal and local level, organizations are looking to have a more systematic and effective way to monitor and implement new regulatory developments.
4. Cyber Security: Cyber security is among the top priorities for operational risk managers today, particularly in the areas of wire fraud and credit card/payments fraud.
5. Third-Party Risk: Regulators are pushing organizations to monitor and manage the risk that their third-party vendors represent. Improvements in this area include enhanced monitoring, increased due diligence and even board-level involvement in critical third-party vendor decisions.
6. Data Quality: The Basel Risk Data Aggregation report released in January 2013 put data quality at the forefront of operational risk concerns with an emphasis on overall data quality and the integration of financial and nonfinancial risk.
7. Human Resources Risk and Staffing: With the high turnover in the risk and compliance disciplines, organizations are challenged to retain and recruit top talent. Add to that the increased demand on these disciplines due to the six previous factors, and human resources risk represents a critical threat to organizations.

Source: Wolters Kluwer Financial Services