If there’s one word that captures the financial services industry in the past year, it’s uncertainty. The regulatory environment has shifted — some requirements have loosened while others have moved in unexpected directions. Yet the risks haven’t slowed down. They’re accelerating.
AI and machine learning are now boardroom priorities. Third-party ecosystems are more complex. Cybersecurity has become a greater threat.
This new risk environment demands a new approach. Risk management needs to function as a forward-looking strategic tool that anticipates threats and builds resilience. Let’s examine the risks that are already building in your financial institution, whether your risk assessments have caught them or not.
2026 Risks for Financial Institutions to Assess
Regulatory pressure may have eased in some areas, but the underlying risks haven’t disappeared. In fact, these risks will only increase and some are intensifying because of the reduced oversight.
Here are some risks your institution should assess in 2026:
Insider abuse risk
As many banks streamline compliance functions, insider abuse can take root. This shows up most commonly in areas like lending, finance, and wire transfers — areas where decision-making authority intersects with access to funds or sensitive data.
Rather than scaling back, institutions need to treat insider abuse as a systemic risk requiring dedicated resources.
Questions to assess insider abuse risk:
- Which employees have dual roles that create opportunities for unauthorized activity?
- Who can override system controls or approve exceptions to standard processes?
- How many employees have privileged system access beyond what their role requires?
- Who has access to wire transfer systems, and what dual-control mechanisms are in place?
AI and algorithmic risk
States are introducing their own AI legislation, and they expect banks to demonstrate explainability and fairness.
If your institution uses AI for credit decisions, fraud detection, or customer service, you need documentation showing how these systems reached their conclusions and evidence that outcomes aren’t discriminatory.
Questions to assess AI and algorithmic risk:
- Which AI systems make or substantially influence decisions impacting customers?
- How does each AI system make decisions? Can we explain this in clear terms?
- What testing is in place to identify potential biases?
- Is governance in place to review AI performance on an ongoing performance?
Third-party risk
Approaching third-party risk as a checklist — collecting SOC reports, reviewing insurance certificates, filing everything away until the next exam — no longer reflects the role vendors play in modern banking.
This is especially true for third parties that process payments, host sensitive data, manage customer communications, and make decisions that directly impact your customers.
Examiners are looking for evidence that your vendor oversight processes actually work, not just that documentation exists. Demonstrate that you understand what your vendors are doing, how they’re performing, and what to do when something goes wrong.
Questions to assess third-party risk:
- What vendors access customer data? What do they do with it?
- Are there protocols in place for when a vendor has a cybersecurity incident?
- How many critical vendor relationships do we have?
- What vendors are using AI and are we reviewing their systems?
Cybersecurity risk
Cybersecurity has evolved from an IT concern to an enterprise-wide risk. Banks hold vast amounts of sensitive data that’s extremely valuable to cybercriminals. It’s not enough anymore to just protect your own institution — your third-party vendors are increasingly attractive targets.
Questions to assess cybersecurity risk:
- Do we test realistic attack scenarios?
- What's our time-to-detection for unusual access patterns or data movements?
- Can we demonstrate to examiners that our cybersecurity controls are operating effectively, not just that they exist on paper?
Political risk and debanking
Regulators and state legislatures are scrutinizing financial institutions that leave relationships with customers tied to controversial industries. Your bank still needs to perform legitimate risk management, but it can't apply discriminatory criteria.
Account-closure and customer offboarding policies need to be documented, risk-based, and consistently applied. Demonstrate that decisions are objective, not based on political considerations or categorical exclusions.
Questions to assess political and debanking risk:
- Are account closure decisions based on documented, objective risk factors?
- Do our policies allow for individual customer risk assessment rather than categorical exclusions?
- How do we document the rationale for relationship exits?
- What processes ensure account closure decisions are reviewed for consistency across different customers and circumstances?
Building a Risk Framework for 2026
Your 2026 risk assessments should ask harder questions than your 2025 assessments did. Challenge assumptions, test controls, and evaluate whether your risk management keeps pace with how quickly threats are evolving.
Using software for risk management streamlines this process. Risk assessment software helps you identify the right questions and quickly understand and calculate your institution’s risks. This allows for real-time risk monitoring and measuring to stay ahead in this quickly changing environment.
Financial institutions rely on industry experts like Ncontracts to identify and manage emerging risks.
By understanding your risks and actively managing them, you can demonstrate that your processes work and better protect your institution.
