Since the outset of the Covid-19 outbreak in the UK PRA and FCA have been asking firms about their risk management and specifically looking to understand if firms are identifying any new or evolving risks. FCA especially has been concerned about new or evolving conduct risks.
Conducting a risk assessment will help you respond to your regulators concerns but also help you better understand if there are additional things you can be doing to protect your firm and its clients.
The FICC Markets Standards Board (FMSB) recently published a register of remote working risks in FICC markets. The register, an Excel sheet, maps 47 risks to 9 themes:
Heightened cyber risk
Sharing of confidential information
Staff treatment and productivity
Third party risk
Threats to market effectiveness
The FMSB proposes 98 different mitigation strategies to control or reduce the risks. Over half of these relate to training /communications, and management, governance, and culture. Some of this may be disproportionate for a smaller firm, but as part of your reasonable steps you could use their risk register to benchmark your firm and find solutions to some of the risks you are facing. For example, making sure people understand their role in identifying potential market abuse or their responsibilities when they are over the wall.
It is equally important to continue the oversight that you would otherwise have exercised in the office and some firms have found that they can achieve this by operating virtual desks. This involves having the team dialled into an office-day long video call. It allows people to interact and ask quick questions as they would have done in the office. This is an excellent way of both supporting new joiners and those who need the day-to-day interaction with their colleagues.
Remaining connected with your clients and suppliers is just as important. Deepening your understanding of your clients wants and needs will foster the relationship and should support its longevity. Conducting extra due diligence and oversight of your service providers and outsourced activities is now crucial to ensuring you stay one step ahead of any potential disruption or interruption to their service.