As 2025 unfolds, financial institutions face an evolving array of challenges. The recent Executive Perspectives on Top Risks Study conducted by Protiviti and NC State University, which garnered insights from over 1,200 board members and executives, sheds light on the primary concerns encompassing financial crime compliance, AI integration, and increasing regulatory oversight.
At the forefront of addressing these challenges is Quantifind, a company dedicated to aiding risk and compliance teams. In collaboration with Protiviti, Quantifind leverages AI-driven risk intelligence to help financial institutions gear up against these emerging threats. Here are six crucial insights from their report and strategies for institutions to stay prepared.
Firstly, AI adoption is drawing greater scrutiny from regulators. Protiviti’s findings suggest that the risks associated with implementing AI technologies now rank within the top ten concerns for businesses shortly.
Upcoming regulations, such as the EU AI Act and new U.S. state laws, will dictate AI’s application in areas like transaction monitoring and fraud detection. To remain compliant, financial institutions will require AI models that are not only effective but also transparent, auditable, and adherent to regulatory standards.
Secondly, the landscape of compliance and regulatory uncertainty is becoming more complex. Protiviti’s study indicates that these factors are now among the top six risks for 2025.
With imminent regulations like the AML6 in the EU and the UK’s ECCTA, financial institutions must brace for tougher anti-money laundering enforcement and data privacy laws. This scenario necessitates quicker, more adaptable AI-driven solutions to ease the compliance burden and diminish reliance on manual processes.
Thirdly, cyber threats and third-party risks remain significant concerns. Cybersecurity emerges as the second most significant risk, with cybercriminals increasingly using AI for sophisticated fraud schemes. The importance of real-time fraud detection has never been more critical.
Additionally, third-party risks, which stand as the seventh overall risk, highlight the vulnerabilities institutions face due to external dependencies. To mitigate these, real-time risk intelligence tools are crucial for detecting threats and bolstering cybersecurity defenses.
Fourthly, a gap in AI and data science expertise is impeding compliance innovation. The shortage of skilled professionals in AI and data science is a top concern, according to Protiviti’s survey. Many institutions find themselves unable to keep pace with AI advancements, hindering their ability to innovate in compliance and risk detection. More organizations are now turning to AI-powered platforms that offer automated solutions to bridge this gap.
Fifthly, economic and geopolitical uncertainties are reshaping risk strategies. The study identifies economic conditions, such as inflation, as the leading risk for 2025, compounded by geopolitical tensions and fluctuating trade and sanctions regulations. Financial institutions need to stay agile, with a keen focus on real-time risk intelligence to navigate these turbulent waters effectively.
Lastly, the balance between privacy and data utilization in AI-driven compliance is becoming more delicate. As AI tools require extensive financial data, the push for stricter privacy regulations grows stronger. Protiviti’s report underscores the importance of adopting privacy-preserving AI techniques like federated learning to protect sensitive data while ensuring robust risk detection.
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