COVID-19, geopolitical conflicts, trade disputes, environmental issues, and social movements threaten financial services. These influence financial institutions’ demand, supply, profitability, and competitiveness. Unemployment affects living standards, poverty, consumerism, tax revenues, and social welfare costs. This essay evaluates 21st-century unemployment risks using Norman’s risk analysis paradigm on Citigroup and Blackrock, two prominent financial institutions that recently laid off workers. Unemployment risk mitigation and sector resilience are discussed in the essay.
Risk analysis goals, scope, and restrictions depend on internal and external factors. Therefore, context matters. Fast-changing technology, customer tastes, and regulations have disrupted finance. Facebook, Amazon, Lyft, and Twitter have laid off staff, hurting innovation and growth. Job losses damage society, the economy, and workers and their families. Global unemployment could reach 8.1% in 2021. New rivals and financial services competition will diminish unemployment benefits. Global unemployment benefit coverage declined from 38.9% in 2019 to 35.6% in 2020 and is anticipated to drop to 33.8% in 2021 (International Labour Organization, 2021).
Step two of risk analysis involves identifying natural, human, and technical threats. Most financial services issues are human or technological. Covid-19, trade disputes, geopolitical conflicts, natural catastrophes, and social upheaval can influence financial service demand and supply, hurting banking institutions’ profitability and competitiveness. Innovation, competition, customer preferences, and regulatory incentives provide new opportunities and difficulties for the sector due to technological disruption and automation. Changes in rules and standards can alter financial institutions’ legal and ethical obligations, compliance costs, and incentives. As global and regional regulatory frameworks harmonize, financial services have Basel III, the Dodd-Frank Act, the General Data Protection Regulation, and the Payment Services Directive. New norms increase stability, openness, and accountability but complicate oversight. Financial firms must adapt to changing legislation to succeed.
In the third stage, unemployment risk probability represents the possibility or frequency of threats to risk analysis objectives. Historical trends, impact studies, and prediction models assess this. Peak unemployment occurred during the 2008-2009 financial crisis and 2020-2021 COVID-19 pandemic. Impact analysis highlights the worst unemployment risks and their amplifiers and mitigators. Unemployment risks vary with the diversity and complexity of the financial services sector. Future forecasting models use previous and present data and assumptions to estimate unemployment. These estimates illustrate that financial services industry unemployment risks depend on future events and uncertainties and diminish as the sector heals and evolves.
The fourth risk analysis step assesses financial institution weaknesses that may increase risk. Technology and digital infrastructure make financial organizations vulnerable in operations, goods, and services. Dependency examines technology pros and cons, while exposure examines market instability and financial speculation. Financial organizations must manage risks and diversify revenue and portfolios. Finance institutions are evaluated on how successfully they adapt to client needs. Financial services serve varied markets. Customers want more personalization, customization, integration, and simplicity. Financial institutions must improve customer service, develop agile workforce initiatives, and train workers for market needs. In conclusion, financial institutions must improve customer service, develop flexible workforce initiatives, and train workers for market expectations.
Step five of risk analysis is choosing financial services risk reduction measures. Financial institutions can reduce risk by diversifying income streams and investment portfolios, improving technology and digital infrastructure, and adopting agile workforce initiatives. Diversification lowers market instability and financial speculation, boosting profitability and competition. Resilience and security reduce cyberattacks and data breaches. Efficiency, innovation, and customer happiness improve. Consumers, regulators, and stakeholders trust financial institutions with strong cybersecurity and data protection. Agile workforce strategies and upskilling improve agility, competitiveness, customer happiness, and 21st-century capabilities. Accenture claims these strategies boost financial institutions’ efficiency, flexibility, cooperation, retention, engagement, and motivation. Financial institutions can reduce unemployment and boost market competition with these measures.
Citigroup and Blackrock, who laid off workers in January 2024, will utilize Norman’s risk analysis framework. Customer wants, market conditions, and tech competition affect both institutions. Citigroup plans to reduce 20,000 jobs, 10% of its worldwide workforce, over two years, while Blackrock will cut 5,000, 7%, over a year. While some experts and investors applaud employment losses, others worry about service quality, morale, and loyalty. Risk analysis finds economic, technological, and regulatory limitations (Norman, 2016). To reduce these risks, Citigroup and Blackrock must diversify their revenue streams and investment portfolios, explore new markets and industries, offer alternative financial services, increase cybersecurity, and adopt agile workforce techniques. Citigroup and Blackrock can adjust to the changing financial services sector.
References
Norman, T. L. (2016). Risk analysis and security countermeasure selection (2nd ed.). CRC Press.
International Labour Organization. (2021). World social protection report 2020-22: Social protection at the crossroads – in pursuit of a better future. https://ilostat.ilo.org/assessing-the-current-state-of-the-global-labour-market-implications-for-achieving-the-global-goals/
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