What are some non-financial operational risks in investment banks?

Some non-financial operational risks in investment banks include:

  1. Cybersecurity
    • Ransomware
    • Phishing
  2. Internal and external fraud
    • Internal salespeople hiding errors or accounts
    • Clients that may be engaged in fraudulent activity
    • Almost 40% of mid-sized and large digital financial services organizations experienced an increase in fraud in 2020
  3. Third party risk
    • Bank works with a lot of third parties (outsourcing database work or financial analysis, fintech, SaaS platforms etc.)
    • Identify and evaluate risk
  4. Process errors
    • Errors in fee calculations
    • Accounting or data entry errors
  5. Business disruptions
    • Vendor disagreement
  6. Reputational risk
    • Inaccurate client records
    • Missed deadlines (can lose clients)
    • Loss of client assets through negligence (wealth management)