New York Fed risk head delivers speech on emergent risks in finance

Privacy, Cyber Risk & Data Security Federal Reserve Bank of New York New York Risk Management

On June 11, the New York Fed’s Chief Risk Officer and head of the risk group, Mihaela Nistor, delivered a speech on the evolving landscape of risk management and emphasized the complexities of modern risks within the financial system. Nistor highlighted an increase in new risks around the world, from geopolitical conflicts and economic uncertainties to cyber threats, data privacy issues, and disruptive technologies. She then categorized these risks internal or external threats.

Nistor first addressed the internal risk landscape within organizations and emphasized the need for organizations to develop a comprehensive view of risk within an enterprise, to identify priorities and allocate resources accordingly. The speech described the importance of building a strong risk culture within organizations to identify and mitigate risks proactively. One way to strengthen risk-management culture, according to Nistor, would be through a “portfolio view” that evaluated risks collectively across projects within an organization rather than in isolation. Nistor stated that this approach facilitated a better understanding of interdependencies and cumulative risk exposure. However, the remarks stress the importance of different management approaches that were tailored to allow flexibility to mitigate an identified risk.

For external risk, Nistor focused on the importance of building resilience within organizations. Nistor noted that while external threats are often unpredictable, an organization can build resilience to meet emerging external risks by identifying critical assets and processes and developing contingency plans.