Abstract
The extensive use of financial technologies and innovations in the provision and utilization of financial products and services causes new risks that require constant attention. The article aims to improve innovation risk management methods to increase the operational stability of financial institutions in Ukraine. By generalizing international practice, the types of innovation risks are classified, and their impact on the activities of financial institutions and consumers is characterized. The attention is drawn to the control strengthening over the impact of operational and regulatory risks, based on important theoretical provisions contained in WBG, BIS, BCBS, and FSB documents. An organizational scheme for the interaction of a financial institution and an IT company is proposed to conclude “smart contracts” based on the use of a cloud service and blockchain technology. The authors propose additional methods of insurance protection and compensation for losses caused by the implementation of risks of using ICT and innovation based on creating the Collective Risk Insurance Fund of financial institutions; offer approaches to the calculation of variable and fixed parts of the contribution to the insurance fund for certain groups of financial institutions. It is concluded that to maintain the proper operational stability of financial institutions in Ukraine, it is necessary to introduce additional collective compensation methods for the risks of innovation and the strengthening of cyber threats.
Highlights
The use of innovation creates additional risks in the activities of financial institutions related to financial technologies and innovations
Analysis of the practice of introducing and using innovations in financial institutions shows that the realization of operational risks and regulatory risks most significantly affects their performance
A lot of attention is paid to innovation risk management in the scientific literature
Summary
The use of innovation creates additional risks in the activities of financial institutions related to financial technologies and innovations. Analysis of the practice of introducing and using innovations in financial institutions shows that the realization of operational risks (through information, technical and technological violations, and impact on the operational stability of financial institutions) and regulatory risks (compliance risks) most significantly affects their performance. This nature of the impact of risks of using innovative tools, products, and technologies is because, in the financial sector digitalization process, there is a transition from predominantly retail operations to the institutional application of new technologies throughout the financial system. Further study of this problem should include an increase in the level of legislative regulation, methodological, organizational, and information support for managing innovation risks in the activities of financial institutions
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