We know that Financial Services institutions invest heavily to develop information systems for risk measurement, especially in recent years. At the rate at which our technologies are developing, it might be less expensive for financial firms to assemble this risk information about its users. After all, Google and Facebook combined knows most of what there is to know about you!
Currently the financial information system is ruled by the CIA rule:
● Confidentiality
○ Prevent unauthorized disclosure of information (read access limitations)
● Integrity
○ Prevent unauthorized modification of information (write access limitations) for the data and the FIS.
● Availability
○Make sure Information available when needed by preventing DoS (Denial of Service) attacks.
After going through the various risk measurement methodologies, I am beginning to wonder if the whole structure of Financing industry going to change when it becomes less costly to assemble risk information. Will it affect capital budgeting and even incentive compensation in banks? I feel like the organizational structure of these banks will change to a more decentralized form, than the stringent central approval regime that is in place now. Reason I think so is because there will be (and currently is) increased flow of risk information outside the firm. A few years down the line information about each person will become more transparent, which might lead to relaxation to many of the strict rules and governing policies that are present now.
Reference:
http://www.bis.org/publ/ecsc07f.pdf
https://www.odu.edu/ts/security/risk-assessment/information-systems-risks