Risk Management, PRMIA

June 25, 2007

New Risk Frontiers - Managing Risk in the Virtual World of Avtars !

Managing Risk in the virtual world - Who's responsibility is it anyway!

Key Point - As more & more financial institutions get creative about reaching out to the youth market by establishing presence in 3D online worlds, it is going to be interesting as to how the traditional Risk management practices will evolve to keep up with this new online presence and associated risks. Will this be managed by the Technology Risk experts or would it fall under Retail Banking Channels Op Risk honchos ?

Background:
Internet & Web as a financial services channel continues to shake up some of the traditional business models in a flat world. The consumer demographics is shifting from the baby boomers in the US & EU towards the generation X and generation Y - specially in BRIC countries & emerging markets such as Brazil, China, India, South East Asia - where a significant proportion of population is below age of 30 and ripe for financial products.

Banks tap social networks to target youth market -
As some of us know the amount of time spent by generation X & generation Y online is taking a quantum leap every single day. As a result some of the more creative financial institutions are preparing to reach out to the future customers by establishing presence in 3D online worlds. These includes pretigious names such as ABN AMRO, ING, Germany's Wirecard Bank, with a virtual branch in 3D online universe Second Life.com Another science fiction game Entropia Universe, has completed an auction of five virtual banking licences that allow firms to set up real world banking systems in the universe. Other examples being the Belgian financial services group Fortis has launched a MySpace-style social network for European entrepreneurs. The UK's Yorkshire Building Society (YBS) has introduced a virtual assistant to its Web site to answer online queries from mortgage customers. Dutch bank ING Direct, also has launched a viral video marketing campaign that promotes its new 'orange mortgage' to renters and potential first time home buyers.

All of these have their own unique Risk exposures - possibly the most sigificant being the customer data protection as well as reputation risk and the most importantly who one is dealing with as most assume online Avtars !

Posted by spachava at 05:19 PM | Comments (0)