KEY RISKS TO LOOK OUT FOR IN THE BANKING SECTOR IN 2025

HIGH-PRIORITY RISKS (Potential Impact: High, Likelihood: High)

1. Cybersecurity Threats: Increased risk of cyberattacks, data breaches, and network compromise.
– Mitigant: Implement advanced cybersecurity measures, conduct regular vulnerability assessments, and enhance employee training.
2. Regulatory Uncertainty: Uncertainty surrounding regulatory frameworks, licensing, and compliance.
– Mitigant: Engage with government officials and regulatory bodies, conduct thorough risk assessments, and develop contingency plans.
3. Financial Inclusion Risks: Risks associated with expanding financial inclusion, including fraud and credit risk.- Mitigant: Develop robust risk management frameworks, conduct thorough customer due diligence, and enhance financial literacy programs.
4. Operational Resilience Risks: Risks associated with business continuity, including power outages and infrastructure disruptions.
– Mitigant: Develop business continuity plans, invest in backup infrastructure, and enhance employee training.

MODERATE-PRIORITY RISKS (Potential Impact: High, Likelihood: High)

1. Digital Transformation Risks: Risks associated with digital transformation, including data breaches and system downtime.
– Mitigant: Implement robust cybersecurity measures, conduct regular system updates, and enhance employee training.
2. Credit Risk: Increased credit risk due to economic instability and customer default.
– Mitigant: Develop robust credit risk management frameworks, conduct thorough customer due diligence, and enhance credit monitoring.
3. Market Risk: Risks associated with market fluctuations, including interest rate and currency risks.
– Mitigant: Develop robust market risk management frameworks, conduct regular market analysis, and enhance hedging strategies.
4. Reputation Risk: Risks associated with reputational damage, including social media and customer complaints.
– Mitigant: Develop robust reputation risk management frameworks, enhance customer service, and engage with stakeholders.

LOW-PRIORITY RISKS (Potential Impact: High, Likelihood: High)

1. Artificial Intelligence (AI) and Machine Learning (ML) Risks: Risks associated with AI and ML adoption, including data bias and system failures.
– Mitigant: Implement robust AI and ML governance frameworks, conduct regular system audits, and enhance employee training.
2. Blockchain and Cryptocurrency Risks: Risks associated with blockchain and cryptocurrency adoption, including regulatory uncertainty.
– Mitigant: Engage with regulatory bodies, conduct thorough risk assessments, and develop contingency plans.

SPECIFIC RISKS (Potential Impact: High, Likelihood: High)

1. Economic Instability: Economic instability, impacting customer spending and revenue.
– Mitigant: Develop contingency plans, engage with government officials, and enhance financial management.
2. Security Threats: Security threats from militant groups, kidnappings, and banditry.
– Mitigant: Enhance security measures, engage with government officials, and conduct regular risk assessments.
3. Infrastructure Challenges: Inadequate infrastructure, including power supply and transportation.
– Mitigant: Invest in infrastructure development, engage with government officials, and develop contingency plans.