Monitoring of digital transformation risks as a key policy to prevent future financial crises

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Abstract

The digital transformation of finance has been significantly facilitated by the COVID-19 pandemic, and it has become the dominant trend and the driving force of development in the upcoming years. The digital transformation brings not only benefits to financial markets, people, companies, and institutions, but it also results in dramatic changes of the underlying risks. The nature, mechanisms, and scale of financial crises are bound to change substantially. The paper develops a new, forward-looking approach to financial crises research. We build further upon the multidisciplinary research agenda on digital transformation by Verhoef et al. (2021). Achieving a bright digital future requires knowing and managing the adverse effects of digitalisation (Clim, 2019; Dickson, 2019; Gimpel & Schmied, 2019). Our literature search has not found any studies on digital transformation risks as a key policy to prevent future financial crises. The purpose of this paper is to examine the existing system of risks monitoring, to analyse changes in risks due to the digital transformation in finance, and to provide policymakers with insights regarding the related evolution of risks. This paper is a policy analysis type of research containing a systematic overview of risk assessment reports at the global and the EU levels.

Keywords: Financial Crisis, Digital Transformation, Risks of Financial Systems, Risks Monitoring

Authors’ individual contribution: Conceptualization — A.A. and O.K.; Methodology — A.A. and O.K.; Formal Analysis — A.A. and O.K.; Investigation — A.A. and O.K.; Writing — Original Draft — A.A. and O.K.; Writing — Review & Editing — A.A. and O.K.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: F65, G01, G28, G32

Received: 06.10.2021
Accepted: 03.12.2021
Published online: 06.12.2021

How to cite this paper: Afanasiev, A., & Kandinskaia, O. (2021). Monitoring of digital transformation risks as a key policy to prevent future financial crises. Risk Governance and Control: Financial Markets & Institutions, 11(4), 26–37. https://doi.org/10.22495/rgcv11i4p2