Review of International Supply Chain Risk within Banking Regulations in Asia, US and EU Including Cost Efficiency Proposals

Abstract

Major financial institutions operate in different regions of the world facing different regulatory landscapes for Supply Chain risks. In this environment, the optimization issue arises how to best comply with the different regulations and reaching cost efficiency at the same time. In this research, the international regulatory landscape for Supply Chain risks of Financial Institutions is introduced and compared internationally. It is understood as an integral part of Supply Chain Risk Management of Financial Institutions, yet the latter is analysed as the research background. Additionally, expert interviews are conducted in order to link the regulation analysis to the current challenges that Financial Institutions face. Finally, recommendations are developed on how banks can be cost efficient, while remaining regulatory compliant, facing increased international regulation in the area of Supply Chain Risk Management. The outcome of the underlying research shows that banking regulation in the area of Supply Chain risks is an important lever in the banking sector to secure customers and financial markets. However, the regulatory landscape is heterogeneous and not consistent on an international scale. Regulation in Asia is highly diverse across different countries due to different states of economic development. The US applies a rather pragmatical approach towards supply chain risk regulation applying different standards of standard setting institutions. Lastly, the EU is very restrictive and strives to unify regulation across member states. Banks should follow a consistent management approach keeping in mind international locations and the strictest regulatory environment they are operating in, to improve cost efficiency yet being regulatory compliant. Also, collaboration with and amongst regulators and other banks internationally is recommended for improved cost efficiency.