The adoption of advanced technologies such as automation and artificial intelligence (AI), and maintaining the workforce to support them, are top risks for 2022 and beyond.

Thirty-six business risk areas for 2022 and through 2031 were assessed by global business consulting firm Protiviti, which surveyed nearly 1,500 C-suite executives and board members of industries around the world, breaking out results for financial services companies.

The top five business risks in 2022 for financial services:

1. Interest rates may have a significant impact on operations. Lingering from the COVID-19 pandemic, low interest rates could hurt profitability, FIs reported.
2. Economic conditions, including inflationary pressures, may restrict growth opportunities or affect margins. Economic stimulus programs enacted during the pandemic continue to contribute to inflation, putting pressure on financial institutions’ margins and profits.
3. Digital technologies such as AI, all automations, natural language processing, visual recognition software and virtual reality may require skills that are in short supply or require training for existing employees. Coupled with labor market challenges and current employee skill limitations, the need to adopt digital technologies is the No. 3 business risk for financial services companies in 2022, but this rises to the No. 1 risk in the coming decade. On this point, “competition for technologists and data scientists never really let up, even during the darkest days of COVID layoffs last spring, and has only intensified since then,” the survey authors noted. “More surprising is the broader recovery in the labor market and how difficult it has been for financial institutions to fill run-of-the-mill operational roles in addition to technology ones.”
4. Succession challenges and ability to attract and retain top talent may limit the ability to achieve operational targets. Taken along with the No. 3 risk above, financial services companies reported they are having difficulty acquiring and retaining necessary talent.
5. Regulatory changes and scrutiny could affect the way processes are designed and products/ services are produced or delivered. Financial services companies said they expect regulatory scrutiny could increase in 2022 and affect their operations.

The top five business risks in the next decade for financial services:

1. Digital technologies may require new skills that are in short supply or upskilling/ reskilling existing employees. AI, automations, natural language processing and visual recognition software, along with labor challenges affecting financial services companies’ ability to maintain the talent needed to implement those technologies, is the No. 1 issue FIs identified looking ahead in the next 10 years.
2. Interest rates may have a significant impact on operations. Low interest rates could continue to affect financial services companies’ profits, survey respondents reported.
3. Disruptive innovation from advanced technologies such as AI, all automations, hyperscalable platforms, faster data transmission and quantum computing may outpace an FI’s ability to compete or manage risk without significant business model changes. In tandem with the No. 1 risk above for the coming decade, financial services companies said they foresee that innovation from advanced technology like AI and automation could impact their viability.
4. Competitors’ products and services could enhance customer experience and affect the viability of FIs’ business models and strategic initiatives. On this point, Protiviti noted FIs may view the ease of market entry and new product launches “could be more top-of-mind due to emerging fintech and cryptocurrency organizations.”
5. Regulatory changes and scrutiny could affect the way processes are designed and products and services are produced or delivered. This business risk remains in the No. 5 spot both for next year and over the coming decade, according to the survey findings. 

The underlying theme of business risk for FIs in the coming years is disruption, said Jim DeLoach, managing director at Protiviti. “The takeaway is: Buckle up. And when I say ‘buckle up,’ I’m not talking about when you’re in a passenger seat of a car, I’m talking about when you’re preparing for a roller coaster,” he said.

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