The regulatory environment has undergone a significant shift in 2025.

Key insights:

• FIs should prepare for and anticipate additional changes in regulatory and supervisory priorities and expectations, necessitating strong regulatory change management approaches.
• Globally active FIs need to navigate increasingly divergent regulatory requirements and continue to build in approaches to go across jurisdictions.
• The speed of regulatory adaptation to new activities (e.g., digital assets and artificial intelligence) is accelerating, but is likely to lag behind the pace of innovation. Proactive engagement and gaming out how the regulators will react to various implemented innovations are essential.

Technology is at the center of risk management and exploring new opportunities.

Key insights:

• The rise of AI technologies and implementation provides potential for greater automation and efficiency, but it introduces new dimensions to traditional risk stripes, including model risk management and third-party
risk management.
• Quantum computing could advance FIs’ risk modeling, fraud detection, and encryption capabilities, while also challenging cybersecurity protections.
• Digital assets offer promise for faster and more efficient transactions, but will require FIs to adapt to a digital and non-digital, tokenized financial system including the incorporation of novel risks and controls into expanded risk management frameworks. 

As global economic uncertainty, market volatility, and geopolitical tensions remain elevated, businesses should look out for potential reductions in consumer spending and international trade activity.

Key insights:

• FIs have reported tightening lending standards and weakened demand for loans and consumer credit.
• Interest rates remain a key risk with earnings dependent on how FIs position their balance sheets for potential decline in the policy rate, along with a potential return of inflationary spikes.
• International conflict and rising geopolitical tensions also elevate sanctions and anti-money laundering (AML) risks, potentially challenging FIs’ existing compliance program resources.