Horizon Scanning & Stress Testing in Financial Services

Financial institutions worldwide are challenged to deliver personal, localized, digital experiences in a secure, trusted environment.

Anticipating this dynamic landscape, the Bank of England’s ‘Future of Finance’ publication outlines the central bank’s status as a world leader in digital regulation.

One of the recommendations was the introduction of broad, machine-executable data tracking to pinpoint early-stage signals of institutional and systemic risk. Not only may this increase regulatory demands on financial institutions (FSOs), in relation to physical and transition risks, but it may also impact their balance sheets.

This whitepaper highlights how AI-driven strategic risk management complements existing regulatory and risk activities within financial institutions.

AI-driven strategic risk management enables FSOs to draw warning signals about future economic shocks from a universe of data that is vast, diverse, and continually evolving. Teams can scan the short-, medium- and long-term horizons for emerging problems, and act when risks become threats.

Utilizing the power of AI allows FSOs to exploit the potential of their internal data. By augmenting it with external (real-world) data sources, they can draw out statistically significant patterns and identify thousands of previously undetectable indicators of physical or transition risk.

Download this whitepaper to see how financial service institutions can plan ahead, tailor their approach to upcoming regulations, and prepare cost mitigation strategies. AI is instrumental in helping FSOs of all sizes gain a comprehensive set of indicators – right across their balance sheet – for counterparties and sectors in need of intervention.

"Machine learning and new data sets can strengthen the Bank’s armoury to spot irregularities and get a better picture of the system’s overall health and emerging risks. There is huge scope to use advanced analytics and new data sets for macroeconomic trends, financial surveillance, and supervision. The explosion in data in finance demands new techniques."

Bank of England, Future of Finance Report 2019

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