With a landmark election year in full swing, US businesses are gearing up to face continued economic uncertainty. Between technological advancement, supply chain disruption, and labour market challenges, decision-makers are forced to contend with an era of widespread change and transformation.
In this final (for now) instalment of our Key Trends for Regulated Businesses series, we’re delving into the US market – read on to find out more about the world’s largest national economy.
Third-Party Risk Management (TPRM)
In light of increasing globalisation and the ever-present threat of cybercrime, TPRM is reaching a turning point. For many, the 2023 collapse of Silicon Valley Bank was a prime example of inadequate Risk Management coming to bear, the impact of which stretched far beyond the borders of financial services. SVB’s potential oversights in addressing not only its internal risk exposure but also those posed by its vendors contributed to its downfall.
Questions regarding third-party risk management must be answered to avoid similar fates unfolding elsewhere – On July 19th (two years after the initial proposition), the Fed, FDIC, and OCC finalized their regulatory guidance for banks on managing third-party relationships.
The report, titled Interagency Guidance on Third-Party Relationships, proposes a guidance framework based on ‘sound risk management principles,’ which is designed to replace the existing guidelines.
The new guidelines recognise the benefits of third-party relationships while attempting to provide consistent direction in the areas of ‘planning, due diligence, contract negotiation, ongoing monitoring, and termination stages of managing third-party relationships.’ You can find the guidance on the Federal Reserve Board’s website here.
The growing reliance on third-party vendors – cloud providers, suppliers, outsourced functions, etc. – exposes the importance of TTRM like never before.
Increased Regulatory Scrutiny
The Basel III endgame is entering its latter stages, reflecting the broader regulatory pressures that are currently expanding across the US financial services space, placing financial institutions of all shapes and sizes in a potentially precarious position. Business leaders will need to adapt their risk management frameworks to comply with the evolving regulations – no mean feat when candidates are hard to come by.
Moreover, the gap between regulatory guidance and technological adoption is widening, especially in the burgeoning FinTech space. The US is a global leader in AI innovation (partly thanks to its innovation-first regulatory outlook), but it’s clear that policymakers are struggling to keep pace with the tech. Despite a few attempts to pass legalisation, no national data law currently exists in the US.
Here at Broadgate, we’ve had the privilege of working with a range of incredible Risk and Compliance candidates across the United States, and we’ve built a strong talent network as a result. Our community-led approach to recruitment helps us identify engaged, qualified, and hard-to-reach candidates in a talent-short market. Want to know more about how our specialist recruiters can help you? Contact the team here.
ESG Concerns/Climate Risk
A form of standardised Climate Reporting has arrived in the US following a recent rule adoption from the SEC ( the Securities and Exchange Commission), reflecting a broader positive outlook in the ESG space.
Published on March 6th, the new rules represent expansive disclosure requirements that reflect those of the EU’s Corporate Sustainability Reporting Directive (CSRD), a landmark step forward for the US regulatory landscape. You can find out more about the new rules here: https://www.sec.gov/news/press-release/2024-31
The increased regulatory pressure is likely to create operational challenges for in-scope businesses, not least of all in terms of data acquisition. In some cases, the increased compliance burden will surely demand an overhaul of existing data management systems.
Support from Broadgate
If you’re hoping to get ahead of the curve, you’ll need to double down on building agile functions. The outcome of the 2024 election will no doubt have a severe impact on the trajectory of the business landscape, and leaders must have a defensible, flexible, sustainable workforce management system in place to navigate the turbulence. We can help you navigate the road ahead. Want to find out more about how our community-led recruitment methodology can support your firm? Talk to our expert consultants today:
