Risks in financial services

Patrick John Ring, Gbenga Ademolekum

Research output: Chapter in Book/Report/Conference proceedingChapter (peer-reviewed)peer-review


While we may not think of it in these terms, we all take risks everyday – whether that be crossing the road, getting on a train, or climbing a set of ladders. Research even tells us that sitting down all day (at a desk or on a couch) can have risks for our health (NHS, 2021). Yet, when it comes to our finances, we seem to be much more aware of the risks we face – whether that’s losing or gaining money on an investment; becoming the victim of fraud in a financial scam; wondering whether we have enough money to cope with unforeseen events; or coping with price rises in the face of changes in the economy. In managing our money, the financial services sector also has to cope with a whole range of risks, including investment risks, borrowers not repaying their lending, or economic turmoil; and if it does not do so successfully then this can create further problems for financial consumers.
This chapter focuses on the risks faced by retail financial services consumers, and how those consumers can, or can be helped to, manage those risks. It also looks at some of the main risks financial institutions face, and the implications if those risks are not managed properly. The discussion begins by looking at what is meant mean by ‘risk’ and why it is such a significant issue in financial services. Thereafter, some of the most common risks faced by financial services consumers are examined, as well as how such risks can be mitigated through financial capability and applying the lessons of behavioural finance. There follows a discussion of the relationship between risk and consumer trust in the financial firms they deal with; before consideration is given to how financial firms manage risks and the importance of risk management and risk culture. Whilst the examples used to illustrate the issues discussed in this chapter relate primarily to the UK, the issues discussed in this chapter can be applied to the experience of consumers and financial services firms across the world.
Original languageEnglish
Title of host publicationA Practical Guide to Financial Services: Knowledge, Opportunities and Inclusion
EditorsLien Luu, Jonquil Lowe, Patrick Ring, Amandeep Sahota
ISBN (Print)9781032130996, 9781032131016
Publication statusPublished - 27 Dec 2021


  • Risk, financial services, vulnerable consumer, financial capability


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