HK Highlights 1 - Digital Magazine Version - Flipbook - Page 13
FTX’s collapse seems to stem from concentration
of control in the hands of a very small group of
grossly inexperienced and unsophisticated individuals...
Never in my career have I seen such an utter failure of
corporate controls at every level of an organisation...”
John Ray, FDIC-appointed CEO of FTX (post-bankruptcy)
PRIVATE EQUITY PROBLEMS
GEOPOLITICS
INDUSTRY REGULATION
This once mighty sector was also
challenged by the macroeconomic
and monetary environment in 2023,
with tightening monetary policy
generally hurting an industry whose
business model has been enabled by
昀椀fteen years of historically low interest
rates. Real estate was also adversely
affected by both higher rates and low
post-pandemic occupancy on the
commercial side.
Russia’s war with Ukraine rumbled on
menacingly, with western support for
Ukraine worryingly wavering for various
complicated political reasons, from
one region to another. Meanwhile,
Vladimir Putin seems certain to win
the presidential election in Russia in
2024 - one of a great many elections
around the world this year - and has
promised a war that could go on for
another 昀椀ve years or more.
Nevertheless, private equity remains
among the most dynamic sub-disciplines
within 昀椀nancial services and will no
doubt survive and thrive, even in this
more dif昀椀cult phase of the economic
cycle. A combined US$2.5 trillion in
‘dry powder’ across the world’s PE 昀椀rms
will also help major 昀椀rms to remain
solvent and creative. Meanwhile, as it
gears up to offer its products to retail
investors via a variety of channels, the
private equity industry has shown an
increased level of interest in adding
risk and compliance specialists to their
organisations’ leadership teams in
recent years.
Meanwhile, escalation of the IsraelPalestine con昀氀ict from October onwards,
with Hamas’s brutal attack on Israeli soil
leading to a relentless bombardment
of Gaza in retaliation, provoking a
political outcry around the world.
The new Consumer Duty standard was
introduced in the UK by the Financial
Conduct Authority in July, with the aim
of improving consumer protection across
the 昀椀nancial services industry. Universally
recognised as amongst the most sweeping
and potentially impactful pieces of
regulation ever introduced, the new rules
have required signi昀椀cant adaptation by
昀椀nancial institutions large and small, with
some FTSE100 constituents being forced
to introduce major changes to their
business models.
In stark contrast with the relatively
peaceful previous decades, geopolitical
risk is now established as one of the
major factors for consideration by
Chief Risk Of昀椀cers across 昀椀nancial
services, alongside climate change
and technology risk.
Compliance of昀椀cers have been immersed
in interpreting and reacting to his latest
complex and transformative piece of
consumer regulation, especially across
the retail 昀椀nancial services end of the
industry.
HK HIGHLIGHTS
PAGE 13