Money laundering risk management in multiple-purpose financial institutions in Mexico: a Bayesian network approach

Financial institution within the USA is faced with great challenge of risk management, hence the pursuit of every financial institution to come up with better innovative ways of managing risks. However, the emerging innovation in risk management in financial institution has an underlying negative implication which is yet to be studied. The aim of this research was to explore emerging innovation in risk management in financial institutions. The research utilized qualitative research design, through an intensive literature review that involved deep research and reviewing of academic scholarly academic articles. This type of approach ensures that the research includes wide variety of sources that support this research and making it viable for future reference. Results showed that the emerging innovation in risk management in financial institutions is digital financing. Owing to the associated implication of excessive technology use, the research suggests that financial institutions should be very cautious, particularly with the associated risk of cybercrime.

Strategic risk management in financial institutions is a critical component for ensuring robust regulatory compliance and maintaining financial stability. This review explores the multifaceted nature of strategic risk management and its importance in the dynamic regulatory landscape of the financial sector. It delves into the fundamental components of risk management, including risk identification, assessment, mitigation, and monitoring, highlighting how these processes help institutions navigate the complexities of regulatory requirements. The discussion encompasses various types of risks faced by financial institutions, such as credit, market, operational, liquidity, and compliance risks, illustrating the need for comprehensive risk management frameworks. The review also reviews key regulatory frameworks, including Basel III, the Dodd-Frank Act, and guidelines from the European Banking Authority, emphasizing their impact on capital requirements, liquidity standards, and governance expectations. A robust risk management framework integrates compliance efforts with business strategy, ensuring that institutions are not only adhering to regulatory mandates but also aligning their risk appetite and tolerance with their strategic objectives. The role of technology, particularly in data analytics, real-time risk monitoring, and cybersecurity, is examined as a crucial enabler for effective risk management and compliance. Best practices for enhancing regulatory compliance are outlined, including continuous monitoring, regular audits, and scenario analysis. Challenges such as evolving regulations, financial product complexity, and globalization are addressed, with recommendations for adaptive strategies and industry collaboration. Through case studies, the review provides insights into successful risk management implementations and lessons learned from compliance failures. The review underscores the importance of strategic risk management in fortifying regulatory compliance and suggests future trends, such as advanced AI and machine learning, which could further revolutionize the approach to risk management in financial institutions. Keywords: Strategic Risk, Financial Institution, Regulatory, Compliance

Knowledge level modeling for systemic risk management in financial institutions

Technological advancements and intensified regulatory pressures have led to a new level of the evolution of risk management in financial institutions. The entities have exposure to different categories of risks, such as credit risks, market risks, operational risks, and cybersecurity risks. The growing intensity of these factors makes proper risk management crucial for the stabilization and success of such enterprises. This report analyzes the best practices and software applications adopted by financial institutions for effective risk management. Improved risk identification, assessment, mitigation, and reporting within the organization would be through the integration of advanced analytics, AI, ML, and cloud computing. Based on this, the current paper assesses the part that these technologies play in contributing to compliance, cost savings, and better decision-making skills.

This study evaluates the impact of technological innovations on operational risk management in financial institutions, focusing on how emerging technologies influence risk identification, mitigation, and management processes. Employing a qualitative approach through literature review and library research, this study synthesizes recent findings on the integration of technologies such as artificial intelligence (AI), blockchain, big data analytics, and cloud computing within financial risk frameworks. Findings indicate that these technologies offer substantial improvements in risk management by enhancing accuracy in risk detection, increasing response speed, and reducing human error. AI and machine learning models, for instance, are shown to enable real-time monitoring and predictive analytics, allowing institutions to identify potential risks before they materialize. Blockchain technology improves transparency and security in transaction processing, thereby mitigating fraud-related risks. Big data analytics provides insights into customer behavior, which can help detect anomalous activities and improve decision-making. However, the study also highlights challenges, including the need for robust cybersecurity measures, potential regulatory gaps, and skill shortages in handling complex technological systems. This study provides insights for financial institutions aiming to balance technological integration with effective risk management, underscoring the need for comprehensive frameworks that align technological advancements with regulatory compliance and organizational capability. Future research should focus on empirical studies assessing the long-term implications of these technologies on risk management efficacy in diverse financial settings.

The paper makes a survey of current trends in business risk management focusing on IS/IT risk management in financial institutions. Special attention is paid to frameworks and regulations available for both financial and non-financial risk management and their relation to IS/IT risk management. The relationship and common and different features between IS/IT risk management and operational risk management are discussed on the basis of a short introduction to the specifics of risk management in financial institutions. The advantages and challenges of those different frameworks are summarized together with the possibility to incorporate some IT/IS risk management tools and methods into operational risk management in practice. Basel II is the main framework covering the area of operational risk management, therefore the paper focuses on the assessment of the impact and integration of the Basel II framework with IS/IT risk management ones.

Risk management in Islamic financial institutions presents a unique challenge due to the dual necessity of aligning with conventional management practices and the legal-ethical framework of Sharia. The central problem of this research is the lack of integration between evolving risk management practices and the foundational principles of Sharia Economic Law, which often leads to either operational inefficiency or potential non-compliance with Islamic legal norms. This disconnect becomes more critical due to increasing financial complexity, technological innovation, and regulatory demands. Therefore, this study addresses the following research question: How is risk management transforming within Islamic financial institutions, and to what extent does this transformation comply with the principles of Sharia Economic Law? The study also explores whether such transformation strengthens the Islamic finance sector's legal certainty, stakeholder trust, and institutional resilience. This research adopts a qualitative-descriptive method with a normative legal approach. Data were collected through document analysis of legal provisions, fatwas, and risk management frameworks used in selected Islamic financial institutions. In-depth interviews with Sharia board members and risk officers from Islamic banks were also conducted to capture practical insights and legal reasoning. The findings show that the transformation of risk management in Islamic financial institutions is occurring on three fronts: technological adoption (e.g., AI and big data for risk analysis), regulatory compliance alignment (integration of OJK and DSN-MUI standards), and internal policy development grounded in maqashid al-shariah. However, the study finds inconsistencies between implementation and Sharia legal standards, particularly in credit and liquidity risks, where conventional models are still dominant. The research concludes that a robust Sharia Economic Law framework and ethical managerial reform is essential to ensuring that risk management practices in Islamic financial institutions mitigate risk and uphold Islamic legal and moral obligations

The article analyses the importance and potential challenges of risk management in financial institutions, highlights the difficulties financial institutions face in identifying, assessing and mitigating the various risks within their organisations, and makes a number of recommendations to The article analyses the importance and potential challenges of risk management in financial institutions, highlights the difficulties financial institutions face in identifying, assessing and mitigating the various risks within their organisations, and makes a number of recommendations to address these issues.This paper explores these challenges, which include spillover effects, cybersecurity issues, efficiency trade-offs between costs and processes, regulatory compliance, and the impact of globalisation. Recommendations are made to address these challenges, such as adopting standardised procedures, embracing technological innovation, identifying emerging risks, and increasing automation of risk management processes. Effective risk management practices are essential to address the complexity of the financial industry and ensure organisational resilience.

Risk management is a constantly recommended practice by boards of directors and for corporate governance worldwide. This fact stems from the uncertainties encountered daily by private and public organizations, in the face of changes in external and internal environments, through technological innovations, interpersonal relations, economic crises, and governance, among others. Knowing the risks means identifying the threats to which an organization is exposed and perceiving opportunities. Therefore, this study intends to identify and deepen the knowledge about the main risk management methodologies adopted in both private and public environments in Brazil. The study uses a qualitative descriptive process that leads to specific and cumulative results by investigating the general essences of the methods of risk management. The theoretical basis is necessary to support the research under the ForRisco project (“Risk Management in Federal Universities: elaboration of reference model and system implementation”), where the present test was started, for the purpose of launching its own methodology (ForRisco) that focuses on the interests of risk management in public higher educational institutions in Brazil. The project aims to launch a guidebook and software that promote and direct risk management in these institutions. All the investigated methodologies corroborate the promotion and the understanding of a risk management process based on a clear and well-defined structure. Finally, the ForRisco methodology is distinguished for the relationship between public higher educational institutions and risk management processes that are more secure and consistent with the Brazilian public administration.

We study risk management in financial institutions using data on hedging of interest rate risk by banks and bank holding companies. We find strong evidence that better capitalized institutions hedge more both in the cross-section and within institutions over time. For identification, we exploit net worth shocks resulting from loan losses due to drops in house prices. Institutions that sustain such losses reduce hedging substantially relative to otherwise similar institutions. The evidence is consistent with the theory that financial constraints impede both financing and hedging. We find no evidence that risk shifting, adjustments of interest rate risk exposures, or regulatory capital explain hedging behavior.

ABSTRACTWe study risk management in financial institutions using data on hedging of interest rate and foreign exchange risk. We find strong evidence that institutions with higher net worth hedge more, controlling for risk exposures, across institutions and within institutions over time. For identification, we exploit net worth shocks resulting from loan losses due to declines in house prices. Institutions that sustain such shocks reduce hedging significantly relative to otherwise‐similar institutions. The reduction in hedging is differentially larger among institutions with high real estate exposure. The evidence is consistent with the theory that financial constraints impede both financing and hedging.

We study risk management in financial institutions using data on hedging of interest rate and foreign exchange risk. We find strong evidence that institutions with higher net worth hedge more, controlling for risk exposures, both across institutions and within institutions over time. For identification, we exploit net worth shocks resulting from loan losses due to drops in house prices. Institutions that sustain such shocks reduce hedging significantly relative to otherwise similar institutions. The reduction in hedging is differentially larger among institutions with high real estate exposure. The evidence is consistent with the theory that financial constraints impede both financing and hedging.

Modernising operational risk management in financial institutions via data-driven causal factors analysis: A pre-registered study

Systemic risk refers to the risk or probability of breakdown (losses) in individual parts of components and is evidenced by co-movements (correlation) among most or all parts . The typical case is the subprime mortgage crisis which began in Feb 2007 and hasnpsilat finished yet, brings big loss to nearly all the financial institutions around the world. In this paper, ontology for systemic risk management in financial institutions is proposed and then an ontology based multi agent system is designed to support decision making for systemic risk management in financial institutions.

ABSTRACTHow do Canadian banks integrate environmental risks into corporate lending and where are they located compared with their global peers? In this paper we report a mixed method analysis of the integration of environmental risks into the credit management. The qualitative and quantitative analyses suggest that all analyzed Canadian commercial banks, credit unions and Export Development Canada manage environmental risks in credit management to avoid financial risks. Some of the institutions even connect environmental and sustainability issues with their general business strategies. Compared with other countries, Canadian banks are best in class, as all six Canadian commercial banks, comprising over 90 percent of Canadian assets, systematically examine environmental risks for credits, loans and mortgages. We conclude that Canadian banks are proactive regarding environmental examinations of loans and that there is a need for a more accountancy related reporting on environmental risk management in financial institutions. Further research is needed to be able to calculate costs and benefits of integrating environmental and sustainability issues into the credit risk management. Copyright © 2011 John Wiley & Sons, Ltd and ERP Environment.