The Post-Pandemic Evolution of Risk Management

Written By: Olivia Vanleeuwen

The morning the COVID-19 pandemic was announced, the S&P 500 fell 7% in 4 minutes after the markets opened, triggering a trading curb that halted trading for 15 minutes for the first time since the 2008 financial crisis (1). The markets continued to drop and become unstable, with implications still at play today post-pandemic. It is evident that the pandemic has vastly impacted the financial industry and in hand their risk management strategies. Risk management can be defined as the process of identifying, quantifying, and managing potential risks faced. In the finance industry risk management tends to centralize on the possibility of losses on an investment (2). The pandemic impacted the financial industry by creating a shift to remote work, creating changes in consumers’ behaviours, and putting the industry on the road to recovery. These implications have shifted the risk management strategies of the financial sector.

Remote Work – Cyber Risk

To limit the spread of the coronavirus many Canadian companies were forced to shut down their in-person operations. This led to many companies adopting the work-from-home strategy. As restrictions were lifted and the pandemic seemed to be coming to an end, many companies continued to execute the work-from-home method. In December 2021, Stats Canada released that the percentage of employees working from home was about 22% (3). Within the financial industry this number was significantly larger as it was reported that 58.3% of this sector worked remotely. Companies such as Wealthsimple, World Bank Group, CNH Industrial,, Barclays, and Bank of Canada have moved to remote work post-pandemic (4). The transfer from work being done remotely versus in office poses new threats to the financial sector. One of the biggest threats of remote work is the increased chances of cyberattacks occurring.

Companies within the financial sector often act as online platforms to process transactions, store data, and provide service. With these companies storing sensitive information such as personal identifiable information, banking information, and buying behaviours, the impacts of cyberattacks are enhanced. As the industry is becoming more and more digital, especially with the move to remote work, their vulnerability to cyber-attacks has increased. The two most common types of cyber attacks they face are conventional attacks that steal clients’ assets or data, and ransomware attacks that seize control of the institution’s information technology system and keep control until ransom payments are made (5). Remote work increases the exposure that companies have to conventional and ransomware attacks in a few ways. First, at home connections tend to be less secure than office connections making it easier for cybercriminals to enter into the company network through remote workers. This is amplified when remote workers are not smart about how they work from home. In a survey done by Alliance it was found that 69% of users use personal equipment for work, 70% use work devices for personal tasks, and 30% allowed for outside parties to use work devices (6). Storing sensitive company information on personal devices greatly impacts the vulnerability to it being stolen in a cyberattack. Second, without the context of the office, threats such as phishing and ransomware are amplified. In the office there is a natural defense against phishing as workers can make each other aware of the emails and can better discuss the source (7). Cybercriminals are seizing on the shift to remote work environments by exploiting vulnerabilities in the infrastructure that enables remote work and tweaking how they target the workers themselves. Ed Skoudis, President of the SANS Technology Institute, says, “Attackers have noticed. They’re really focused on attacking home workers because they are no longer protected in these enclaves that organizations spent the last 30 years building” (8). This can be noted by the significant increase in the amount that Canadian businesses are spending on prevention and detection of cybersecurity, as in 2021 the amount was $10 billion, an increase of $2.8 billion since 2019 (9).

Cyberattacks in financial industries can lead to a loss of confidence in the security of the financial sector (10). Due to the pandemic and restrictions consumers relied more on technology and their lives become more digitalized. This has led to the issue of privacy being a hot topic. Consumers are becoming more aware of the importance of privacy and how technology exploits this. Privacy is now high on the list of many consumers when it comes to choosing a financial company. If a financial company faces a cyberattack, consumers will lose their trust in that company and are likely to take their services elsewhere. This leads to the financial sector prioritizing privacy and cybersecurity measures in hopes to reduce the risk of cyberattacks and a breach of data. This prioritization can be done in various methods such as increasing spending in technological security measures, consistent cyberattack training and education for employees, and implementing a formal security infrastructure. In conclusion, remote work increases the threat of cyberattacks forcing the financial industry to keep on top of their risk management strategies for cybersecurity.

Changing Consumer Behaviours – Customer Attrition Risk

COVID-19 has changed consumer behaviours when it comes to financial services and the finance industry needs to take notice to ensure customer satisfaction. For a majority of Canadians, the COVID-19 pandemic created financial hardships. Many workers were stress as income decreased but expenses and the cost of living remained the same. In 2019 a survey came out from Stats Canada which reported that 54% of Canadians have felt an increase in stress over the past 12 months. In 2020, during the pandemic, this survey number rose to 76% (11). The pandemic has left consumers with financial anxiety and stress that has shifted their behaviours and mindset when it comes to their finances, financial services, and their expectations.

As Canadians begin on the path of recovery from the economic impacts of the pandemic, there is a new heightened awareness of the need to build financial resilience, especially with the looming economic uncertainties we are experiencing post-pandemic (12). Because of this many consumers are seeking to become more financially stable and are relying on extended support and flexibility from their financial services as they recover from the crisis (13). This has impacted the risk management strategies of the financial sector as delivering services to consumers and markets without disruption is on the forefront of customer satisfaction and attrition. The financial industries’ risk management is evolving as the risk of customer attrition is increasing, as consumers’ expectations of financial institutions and government support has rose since the pandemic. Consumers struggling with finances are desperate for support and will lean on financial services to provide it. This support can be seen in providing more online services, ensuring privacy within services and platforms, providing transparencies in services and being open and honest about the markets. Financial institutes need to evolve with the changing needs of consumers in order to minimize the risk of losing business to other companies within the sector.

Financial Services Recover – Risk of Economic Uncertainty

The pandemic created significant instability and high volatility in global capital markets, with the financial sector being one of the most impacted. Bank valuations all of the world decreased, as many saw a price drop in mid-March. The STOXX North America 600 Banks Index saw a massive decline of 31.23% for this given period. In the image below, the green shows pre-pandemic bank numbers, with the purple showing April 2020 and the blue showing June 2020. It is clear that banks’ valuations plummeted with the pandemic and are now slowly climbing back up to their pre-pandemic numbers.


The financial sector is recovering from the implications of the pandemic, as many were expected to support the government-led schemes that provided emergency funding loans or stand-by liquidity through loan facilities. These government responses impacted the financial industry as many announced a large drop in profits partially due to having increased loan loss provisions (15). The International Finance Corporation of the World Bank Group performed a survey earlier this year and it showed that nearly one in two lenders remain conservative in their lending to micro, small, and medium enterprises compared to pre-pandemic (16). This is a result of the impact of freely providing credit to individuals during the pandemic. Financial institutes are now being cautious with loans and are increasing collateral and application requirements in order to avoid high loan loss provisions. As financial institutes continue on their path to recovery from the pandemic, they are not soon to forget the vast implications the economic severity caused. This has brought awareness to the importance of being prepared for economic uncertainty, as the pandemic was unexpected and its impacts economically destructive. The financial sector needs to prioritize enhancing downturn readiness. It is important that they validate that their risk monitoring activities are flagging early risks in enough time to inform decision-making and allow them to prepare for instability in the markets.


In conclusion, it is clear that the pandemic has shifted the risk management strategies within the financial industry. First, the shift to remote work increases the chances of cyberattacks which in turn has made the financial industry prioritize cybersecurity and strong technology infrastructures. Second, the pandemic has changed consumer behaviours, making them seek greater flexibility and security from their financial industries. This has pushed financial services to put an emphasis on customer satisfaction and attrition. Third, the pandemic brought forth mass economic implications severely impacting the profits of the financial services. This shifted their risk management strategies by increasing their awareness of the need to be prepared for sudden economic uncertainties. It is expected that the financial industries’ risk management strategies will continue to evolve and change as the era of the post-pandemic has looming economic uncertainties ahead.

Works Cited

  1. Wikipedia. 2022. “Financial market impact of the COVID-19 pandemic.” Wikimedia Foundation. Last modified August 23, 2022.
  2. Kenton, Will. “What Is Risk Management in Finance, and Why Is It Important?” Investopedia. Investopedia, October 13, 2022.
  3. Clarke, Sean, and Vincent Hardy. Working from home during the COVID-19 pandemic: How rates in Canada and the United States compare. Government of Canada, Statistics Canada, August 24, 2022.
  4. “Top Fully Remote Financial Services Companies.” Accessed November 23, 2022.
  5. Nevins, Mark. “New Dangers of Working from Home: Cybersecurity Risks.” Forbes. Forbes Magazine, November 9, 2022.
  6. “Working from Home Increases Cyberattack Frequency by 238%: Alliance Virtual Offices.” Alliance Virtual Offices | Alliance Virtual Offices Blog, September 7, 2022.
  7. Nevins, Mark. “New Dangers of Working from Home: Cybersecurity Risks.” Forbes. Forbes Magazine, November 9, 2022.
  8. Pratt, Mary K. “Remote Work Cybersecurity: 12 Risks and How to Prevent Them.” SearchSecurity. TechTarget, August 31, 2022.
  9. Government of Canada, Statistics Canada. “Impact of Cybercrime on Canadian Businesses, 2021.” The Daily, October 18, 2022.
  10. Brando, Danny, Antonis Kotidis, Anna Kovner, Michael Lee, and Stacey L. Schreft. “Implications of Cyber Risk for Financial Stability.” The Fed – Implications of Cyber Risk for Financial Stability, December 5, 2022.,recovery%20process%20could%20be%20extensive.
  11. Canada, Financial Consumer Agency of. “Government of Canada.” / Gouvernement du Canada, August 22, 2022.
  12. Fonber, Jonathan David, Andrew Heisz, Jennifer Kaddatz, Eric Olson, Kirk Donaldson, Ian Walker, Eloise Duncan, and Kujtim Koci. “ The financial resilience and financial well-being of Canadians during the COVID-19 pandemic. Government of Canada, Statistics Canada, September 9, 2021.
  13. Meekings, Karl, and Jan Bellens. “Four Ways Covid-19 Is Reshaping Consumer Banking Behavior.” EY. EY, August 31, 2020.
  14. “Covid-19: Impact on the Banking Sector.” KPMG. Accessed December 5, 2022.
  15. “Valuation of Banks and Insurers in Times of Covid-19.” BDO. Accessed November 28, 2022.
  16. “Banks Show Strong Signs of Recovery from the Pandemic.” Accessed November 28, 2022.

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