A new era in risk management of financial firms

This contribution analyzes how new technology has changed the risk management landscape for financial companies. Accelerating technological innovations in finance industry has disrupted the old order and created new challenges and opportunities along with new winners and losers. New payment systems, digital currencies and investments are just some examples of these innovations. Formerly self-sufficient finance companies must collaborate with FinTech companies in order to protect market shares. Technological innovations and collaborations among companies in the finance sector do not change the structure of risk management departments; rather they increase the extent to some risks types, such as operational, reputational, and legal risks. E-financing activities, outsourcing in finance companies, and cyber threats are the major new risk types that finance companies must handle in addition to traditional risks. New risk management principles guide the risk manager to tailor specific practices for each finance company.