Financial institutions (FIs) continue to expect cybersecurity and data disputes in the coming year, along with ESG disputes. We will see growth in climate-related litigation against financial institutions from NGOs and activist shareholders. Until recently, claims have focused on the disclosure of climate-related information. However, the trend is now moving to scrutiny of what prudent financial management means. For example, what fiduciary duties are owed when acting as a financial advisor in investment planning or M&A transactions?
Our new episode of FInsight: Global Financial Institutions Industry Podcast examines the takeaways for FIs from The Year Ahead: Global Disputes Forecast 2023. The speakers from this episode are Jonathan Peddie, global chair of Baker McKenzie’s Financial Institutions Group and a partner from our London office and; Amy Greer, co-chair of the North America Financial Regulation and Enforcement practice and a partner from our New York office.
Key highlights of the episode include:
- Financial institutions (FIs) identify three external factors that will drive disputes throughout 2023: (1) stock market volatility, (2) the changing economic cycle, and; (3) cybersecurity / data privacy issues. In terms of the types of disputes, FIs identified (1) cybersecurity / data privacy issues, (2) ESG disputes and; (3) insurance disputes.
- 80% of FI respondents are concerned about the risk of external investigation in 2023. The industry faces significant regulatory risk in the year ahead, as regulators and other agencies increase compliance enforcement.
- The scale of concern about cyber and data disputes is significant. Companies across all industries are also concerned about the risks of cyberattacks but the consequences for FIs can be particularly significant.
- We will see growth in climate-related litigation against FIs from NGOs and activist shareholders. Until recently, claims have focused on the disclosure of climate-related information. However, the trend is now moving to scrutiny of what prudent financial management means.
Other external risks for disputes identified in the survey are geopolitical issues and competitive environment. Looking ahead – FIs need to protect their organizations by staying abreast of emerging trends and challenges shaping the disputes landscape in the medium-to-long term.
You can read the full report – The Year Ahead: Global Disputes Forecast 2023 to know more about the relevant takeaways for FIs and other industries. You can also check out our The Year Ahead: Global Disputes Forecast 2023 Webinar Series on BakerMcKenzie.com
