Risk Threats - The greatest risks for every sector
With the nature of risk broad and highly diverse, the high-threat risks facing one sector can be completely unique when compared to another. CareersinRisk.com have broken down the top risks facing the four leading industry sectors below.
The financial services sector continues to be the top risk target given the lucrative money, data and power contained within the sector. Cybercrime and data theft are among the multitude of risks facing the financial services sector.
- Cyber Security
The financial services industry has transformed to a technology dependant sector, placing cyber security and cybercrime as the top industry risk. As a $600 billion a year industry, cybercrime presents a considerable opportunity for criminals and places demand on financial institutions to detect and investigate threats with increased efficiency.
From Artificial Intelligence (AI) to cloud services, the infusion of advanced technologies with the shifting demand for instant and accessible banking and financial services have created openings for cyber criminals. Responding to the daily threat of cyber-attacks and security alerts, which come in the hundreds of thousands for many banks, leaves cyber security the top risk.
- Credit Risk
After cyber security, credit risk poses an ongoing threat. Whilst avoidable through correct monitoring, financial institutes, particularly banks, face the considerable risk of loss when credit is not paid at maturity.
- Regulation & Compliance
Regulatory change is an ongoing challenge in all sectors, however the push for increased scrutiny in the financial sector makes it a heightened challenge.
Looking more specifically, the United States is currently pushing to refine outdated provisions and replace the existing Dodd-Frank Wall Street Reform and Consumer Protection Act. Whereas regulations in Europe are looking to implement a one, harmonized regulation manual. The continued uncertainty surrounding the outcome of Brexit in the United Kingdom will pose influential in the UK’s future regulatory landscape.
The top risks facing the higher education sector surround concerns of reputation, financial sustainability and student recruitment. The ongoing shift in student demographics and cultural demands has seen turbulence and unpredictability concerning risk managers in the education sector.
The last twelve months has seen the sector plagued with headlines of scandal, fraud and cyber breaches, leaving it unsurprising that issues surrounding reputation are the biggest risk burdening universities and educational institutes. The College Admission Scandal and continuous funding cuts did little to help the educational sector bolster reputation or affirm stakeholder confidence.
- Financial Sustainability
From cuts to funding to the increasingly competitive market, the shift to students as consumers has added unpredictability to the ongoing financial health of the sector. This is seen specifically through two main issues – a failure to diversify revenue streams and continually reduced research funding.
Whilst awareness within the sector is growing, failing to reduce costs and increase income growth will seriously impinge on institutions’ future investment in infrastructure and facilities.
- Student Recruitment
Sitting within the top five risks on PwC’s Higher Education Sector risk profile for the last five years, as the life blood for many, student recruitment is among major concerns. With overall financial stability dependent on student recruitment, the declining application numbers in higher education is a growing risk to financial health as recruitment fails to meet growth targets.
Big Four firm Deloitte recommends those operating in the sector adopt an “enterprise” approach to risk management. Implementing a proactive, interconnected risk management framework as opposed to the traditional siloed approach, this approach encourages increased awareness of the full risks.
Not for Profit & Charities
Non-profit organisations, like for-profit organisations, face many risks. From theft and fraud to regulatory demands and financial uncertainty, below are the top threats facing non-profits and charities.
- Theft & Fraud
Unfortunately, and unsurprisingly, the not-for-profit sector contributes over ten percent to all fraud committed according to the Association of Certified Fraud Examiners. Whether perpetuated internally, through clients or external vendors, fraud poses a major financial and reputational risk.
Given this sectors dependency on public support, such threats would pose detrimental to stakeholder confidence. With reputation interviewed with this confidence such breaches of could prove catastrophic.
- Regulatory Compliance
Not-for-profit is a highly regulated sector, understandably because of their tax-exempt status. Assuring alignment with the specific rules, such as not using funds for financial or political gain is an ongoing consideration in the sector. Risks associated with non-compliance include reputational tarnish and the possible loss of funding.
- Financial Sustainability
Not-for-profits rely on heavily on funding. If an organisation operating in the sector is incapable of demonstrating evidence of their work for example funding difficulty may ensue. The battle for financial support is growing ever competitive creating both a perpetual risk and opportunity.
The scope of risk impacting the healthcare sector spans physical violence to cybercrime. Given the complexity of the sector, risk management has expanded the scope in which they operate.
- Cyber Security
From the outside an unexpected risk but given the considerable volume of high-value data contained, the healthcare sector is a growing cyber target. This growth in cybercrime corresponds with the digitalisation of patient information and the growingly outdated technologies still used by many operating in the sector.
Cyber security provisions in healthcare is lagging in comparison with most sectors.
- Violence in the Healthcare Workplace
On-site violence is an alarming and growing epidemic. The staggering rates have left healthcare workers experiencing on-site violence four times the rate of someone working in the private industry according to Occupational Safety and Health Administration (OSHA).
- Regulatory Change & Regulatory Scrutiny
Given these rising risks, the regulatory landscape has shifted in response. A public push for increased transparency within the sector coincides with pressure to reduce regulation and the costs associated meeting regulations, a cost which is rapidly climbing.
Looking across these four sectors, it is evident risk trends span industries. The dynamic scope of risk calls for this “enterprise” approach, as recommended by Deloitte and many other firms, embracing a more holistic, company-wide viewpoint in the approach to risk management.