From silos to synergy
In an era of compounding threats, cyberattacks, offshore outsourcing vulnerabilities, financial crime, spam, and fraud, financial services businesses can no longer afford to manage risk in silos. The traditional model, where cybersecurity is owned by IT, AML/CTF and privacy by compliance, outsourcing by operations, and fraud by finance, is not just outdated, it’s dangerous.
Recent findings from ASIC’s review of offshore outsourcing arrangements among financial advice licensees underscore this point. Governance gaps weren’t just about outsourcing: they revealed broader weaknesses in how risks were identified, assessed, and managed across the business. The message is clear: risk is interconnected and so must be our response.
The problem with silos
Siloed risk management creates fragmentation. Each team focuses on its own domain, often unaware of how their risks intersect with others. For example:
A phishing email (cyber risk) may lead to unauthorised access (privacy risk) and fraudulent transactions (fraud risk), which could involve client data stored offshore (outsourcing risk), triggering suspicious matter reporting obligations under the AML/CTF Act.
Marketing teams may inadvertently expose the business to spam and privacy breaches, while compliance teams remain unaware until a breach occurs.
This disjointed approach leads to:
Delayed responses to incidents due to unclear ownership.
Inconsistent controls across departments.
Missed opportunities to detect patterns and prevent escalation.
Regulatory exposure, especially when governance frameworks fail to reflect the full risk landscape.
The case for a whole-of-business risk approach
A whole-of-business approach doesn’t mean every team becomes a risk expert. It means embedding risk awareness, accountability, and coordination across the business. It’s about creating a culture where risk is everyone’s business and where systems, policies, and oversight reflect that reality.
Key Principles of Integrated Risk Management:
Unified Risk Governance Establish cross-functional risk committees that include compliance, IT, operations, legal, and client services. Ensure board-level visibility of all material risks, including those arising from outsourcing and cyber threats.
Integrated Risk Register Maintain a single, dynamic risk register that captures all risk domains across cyber, AML/CTF, fraud, spam and outsourcing. Link risks to controls, owners, and review cycles. Highlight interdependencies.
Policy Alignment Ensure interconnectedness between relevant policies, such as: Outsourcing policies referencing cybersecurity standards. AML/CTF procedures should include fraud indicators and data breach protocols. Marketing and client communications must align with spam and privacy regulations.
Technology Enablement Use platforms that consolidate incident reporting, risk assessments, and compliance workflows where possible. Automate alerts and analytics to detect cross-domain threats.
Culture of Risk Ownership Train all staff, not just risk teams, on how their roles intersect with broader risk domains. This includes off-shore team members. Encourage proactive reporting and escalation of concerns.
Why This Matters Now
Regulators are increasingly focused on governance, risk management and accountability. ASIC’s review is just one example of how fragmented risk management can lead to compliance failures. But beyond regulation, integrated risk management isn't just a regulatory imperative (and not just for large organisations!) it's a strategic advantage.
As threats become more complex and interconnected, so too must our response. For financial services firms, now is the time to rethink how risk is governed, shared, and embedded across the business. If you're exploring how to make that shift, Tangelo can help.