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Risk Management Explodes in Importance

Recently, I had the pleasure of speaking to risk management executives attending the 1st Annual WolfPac User Conference at the Colonnade Hotel in Boston, MA.  Watch for this conference to grow next year. I provided a 2010 financial industry outlook.  For an hour we explored the economic, competitive, regulatory and Internet issues that will dominate the financial services industry next year.  Major points presented included a shallow, few jobs economic recovery with unemployment peaking mid-2010 and housing foreclosures and home price declines bottoming out year end 2010.  Also, we discussed possible Washington battles of an intensity we’ve not seen in decades over comprehensive regulatory reform, including new and restructured regulators, the proposed Consumer Financial Protection Agency (CFPA) and national mortgage reform.

The industry faces more regulatory uncertainty than most professionals have seen in their careers.

Competition will increase in intensity next year as some financial institutions (FIs) change business models and as some customers leave their FIs for the promise of better deals and relationships at community-based FIs.  I also spent time discussing how the Internet, with its wave of new Internet-based, financial products such as remote deposit capture and mobile banking, has placed a greater responsibility on risk managers to mitigate internal, vendor and customer risks.   Risk management continues to evolve as an essential executive and employee focus for financial institutions.