This lesson examines the new and emerging risks that are reshaping the internal control and compliance landscape, including cybersecurity, ESG, and the challenges posed by new technologies.

8.1 Cybersecurity as an Emerging Risk
Cybercrime is a fast-evolving risk that requires continuous adaptation of internal controls. Financial institutions face threats ranging from data breaches and ransomware to sophisticated phishing campaigns. The 2025 update to the FATF Standards now clarifies that non-face-to-face business relationships are only to be considered a potentially higher-risk situation where appropriate risk mitigation measures have not been implemented, acknowledging that digital identity systems can reduce risk.

8.2 ESG and Sustainable Finance
Environmental, Social, and Governance (ESG) factors are increasingly integrated into risk management frameworks. The expansion of risks and the emergence of new types, including climate risk, significantly increase the complexity of the risk management function. This includes managing risks related to climate change and ensuring the bank’s activities align with broader sustainability goals.

8.3 Digital Assets and FinTech
The digitalization of finance has transformed the speed, cost, access, and convenience of payments but has also made financial crime risk management increasingly challenging. Many new payment products, systems, and providers undermine transparency because they are not subject to payment transparency and “travel rule” requirements. Financial institutions must understand the features and risks of these new payment products and providers to effectively identify, assess, and manage financial crime risks.

8.4 The Future of Audit and Compliance
The role of internal audit and compliance is becoming more strategic and data-driven. The integration of the ICS is essential for operational efficiency, supporting strategic objectives, and guaranteeing oversight and regulatory compliance. Continuous monitoring, automation, and the use of advanced analytics are set to become even more important in the future of bank control and assurance functions