The FICC Markets Standards Board (FMSB) has published a Spotlight Review which examines remote working risks in FICC markets.
Following COVID-19 being declared a global pandemic and the closure of many offices, FMSB formed a working group of members and other interested market participants to consider the impacts of financial services activities being undertaken by a workforce which is widely distributed and using remote working.
The working group set about identifying and capturing the main priorities from a wide range of risks that arise from the new working environment, with a focus on areas which impact the fairness and effectiveness of wholesale FICC markets, and then to consider mitigants or strategies to manage these risks.
As part of this, FMSB has created a risk register that shares the experience and observations of the working group for market practitioners to use when conducting their own risk assessments.
The Review categorises risks into nine thematic categories:
- Control limitations
- Execution risks
- Heightened cyber risk
- Sales lifecycle
- Sharing of confidential information
- Staff treatment and productivity
- Third party risk
- Threats to market effectiveness
Within these nine categories, the risk register outlines over 40 specific risks, including cultural leakage and reduced employee engagement, weakened control of confidential information, poorer identification of suspicious trading activity, and physical and mental stress resulting from home office environments. For each risk there is an outline of the potential impact and example control and mitigation measures.
FMSB says the risk register is already being used by members of the working group in considering how they should best deal with the challenges posed by remote working, adding it may decide to issue subsequent iterations when it considers there are substantive changes that would be helpful to share.
“It has been impressive to see this group of market participants come together and pool their collective view of the most significant risks arising from the COVID-19 pandemic and the rapid adoption of remote working practices,” says Rosie Murphy Williams, chair of the FMSB remote working risk and controls group. “I am certain that the resulting risk register will prove incredibly valuable to firms across the financial services sector, regardless of business model or location.”
Martin Pluves, CEO of FMSB, adds, “The rapid transition to widespread and prolonged remote working presented significant new challenges for all participants in wholesale FICC markets. It would appear that remote working in one form or another is here to stay and each firm must navigate its own unique set of challenges. FMSB’s risk register, the product of a diverse group of practitioners, provides practical considerations to help firms with the task of identifying and mitigating risks during this ongoing period of significant change.”