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HOW OPEN DATA CAN HELP FIGHT CLIMATE CHANGE

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David Lais, Co-Founder and CPO at Ecolytiq – providing banks and financial institutions with the digital infrastructure for green finance.

 

“Data is the new oil” – a phrase that was reportedly coined by UK Mathematician and architect of Tesco’s Clubcard, Clive Humby.

Humby explained that just like oil, data is valuable but only once it has been refined. “It has to be changed into gas, plastic, chemicals, etc. to create a valuable entity that drives profitable activity.”

In effect, data needs to be broken down and analysed for it to reach its true potential.

The importance of data is clear. Just take a mere look at the ways that platforms such as Google and Facebook use personal data to build better advertising, to target demographics and customise user experiences. It has huge upselling value and is being collected from nearly everything we do on a day-to-day basis. Data’s increasing value, however, isn’t just reserved for improving advertising – it’s one of the most underused tools in the fight against climate change.

 

David Lais

Can the collection of data help fight climate change?

Sustainability is a topic at the forefront of our society and is especially important to the Millennials and Gen Z generations. These younger generations also make up the most important and influential customer base, and it is therefore no longer surprising that numerous companies are jumping on the “sustainability” bandwagon.

As it stands right now, consumers are wholly unaware of their individual impact on the environment.

 

Capturing data for sustainability

Capturing data for sustainability is like a huge and very complex jigsaw puzzle; it only makes sense when all the pieces have been put together. To ensure we can complete this puzzle, we need to share information and share data. Once we can see the big picture, we can turn data into an actionable platform for change. Awareness is knowledge and knowledge is power.

That’s why when it comes to sustainability, open data is crucial if we are to push not only society, but an overall urgency on climate change further. The fundamental idea behind open data is that we need more transparency. Of course, there are privacy matters to consider, and we don’t want to share personal information. Yet, when it comes to sustainability, the real value exists when we start sharing, putting the data puzzle pieces together to form a comprehensive picture that works for the greater good.

Every year, thousands of studies connected to climate change are published. However, what is missing from this research is the direct application to our daily lives and the appropriate data from companies to go with it.

If we want to know how sustainable a product really is, we must make supply chains more transparent. We need to encourage every stakeholder involved in the process of creating a product to disclose their product impact on the environment. This way, we achieve the necessary access to data and, ultimately, the individual price and consequences for the environment.

 

A great opportunity for the financial industry

The solution, therefore, lies in the collection of the information and in the data itself. In my opinion, financial institutions and banks are sitting on a treasure trove of data. The growing desire from society to be more sustainable is one of the greatest opportunities that has ever presented itself in the industry and is poised to create massive growth in the banking and finance sector. Yet, the industry still only talks about the climate crisis as a “challenge.”

So, what can the financial industry do to address this challenge?

By now it is obvious that we need greater transparency, and we need to see open data as both an opportunity and a solution. The financial world could revolutionize the use of existing data to create this transparency, but also define new standards and requirements to encourage companies to share their sustainability data.

There is already so much information available to help to drive change. Of special importance here are personal bank statements that reflect your consumption behaviour. When used correctly, they can help consumers as well as companies understand their individual impact on the environment and thus achieve more transparency, build awareness and really nail down individual influence on the environment.

 

A digital world

We have become a digital world and digitization inevitably creates transparency. Those who understand how to use it properly and are really serious about environmental protection will always emerge as winners. Moving forward, the financial industry will play a major role in fighting climate change as it starts to embrace the opportunities available to implement a digital infrastructure for green finance. In turn, financial institutions will be able to offer their customers environmental footprinting as well as personalised impact offsetting and ESG investments, further utilising the opportunity to build a sustainable business case. And this is just scratching the surface of exciting possibilities.

One thing is clear – the most influential consumers, younger generations, want an intact and liveable world. If the financial sector can offer solutions, which help to educate them on how their spending habits impact the planet and offer them insight into how they can change their consumer behaviour to make the world a better place, then it is clear that open data can really help towards fighting climate change.

Surely now is the optimum time to start collaborating to piece together this vast and complex puzzle. If not now, then when?

This article is part of my thought leadership series. It reflects my thoughts and ideas, but the articles themselves are created by many with love and are therefore a real team effort. A special thanks to the ecolytiq and Make More Noise communication teams for helping me to shape my thoughts into beautiful words.

 

Business

Four ways traders can manage risk

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By Dáire Ferguson, CEO at AvaTrade

 

Understanding the markets in which you are trading is incredibly important to optimising profit, as well as manging risk and loss. While trading can be incredibly lucrative, it can often be difficult to judge which way the market will move – especially when executing shorter-term traders, where unknown factors can cause unexpected movements. Being aware of the risks is vital to avoid unnecessary losses and to optimise the trading experience.

Dáire Ferguson

There are several techniques that can be employed to make sure the risks associated with trading are controlled, rendering the trading experience smoother and more enjoyable. From beginners to experts, having these tactics in your arsenal will enable traders to be savvier, and more confident.

 

Understanding the risks

To really be able to manage risk, it is imperative to understand the two types of trading risks.

 

Leverage

Leverage is where traders stake only a percentage of the value of the underlying asset they wish to trade on but accept exposure to the full value of the profit and loss that comes with the asset’s price changes. This enables traders to take sizeable positions for comparatively less trading capital, thus providing an opening for big wins and substantial rewards.

However, with this comes the risk of similarly significant losses. As an example, if a trader opens a £100 trade on an asset worth £1,000, using leverage of 10:1, this means that if the assets value increase by 10 per cent, the trader’s money will be doubled. But if it drops by just 10 per cent, the trader will lose all their stake. This balance of high risk and high reward necessitates careful management. Leveraging typically applies to purchasing and trading contracts for difference (CFDs).

Volatility

Volatility is characterised by unexpected fluctuations in the prices of assets and is defined as the rate at which pricing rises or falls given a particular set of returns. Volatility applies to all assets, but the regularity and size of price changes differs hugely across different asset groups. In fact, in some markets, volatility is actually predictable. The cryptocurrency market is well known for its fluctuations, characterised by frequent and, often, significant changes in price.

There are scenarios in which volatility can be desirable for some traders as it fosters greater profit margins. However, it also sharply increases the potential for large losses. Nevertheless, there are a number of ways to spot incoming market fluctuations. These include economic volatility, geopolitical tensions, and changing policies.

 

Managing the risks

 

Choose the right broker

So, what can traders to do manage these risks? The first step is to choose the right broker. Having the right broker can go a long way to limiting the risks that come with trading, including managing counterparty risk. For example, when you purchase CFDs, you are purchasing a contract with a broker – not the asset itself. Therefore, traders must be 100 per cent certain in the knowledge that the broker they’ve chosen to operate with is capable of making good on the value of that contract.

Traders who are just starting out on their trading journey should look to open a trading account with an established name that is well regulated in a variety of jurisdictions. Higher-quality brokers will generally have a wider range of risk management tools and offer better features, which will allow traders to manage the buying and selling of assets in a better, more sophisticated manner.

 

Take out protection on riskier trades

For new traders, or those who are looking for extra support, it is worth considering taking out protection against losses for a set period of time. Certain brokers offer risk management tools that provide thorough protection against such losses. These tools generally require just a small fee, not unlike the premium on an insurance policy. These risk management tools allow users to stay in the trade, riding out any short-term drops in value and benefitting from a positive overall momentum of the position. Therefore, if the market moves in a different direction to what was originally expected, users only lose the cost of purchasing the protection and can recover their losses.

 

Set-up stop-loss orders

Another form of protection against losses is through a stop-loss order. This is an instruction that is executed automatically when certain conditions are met. Therefore, stopping losses from falling below a certain point, and setting a limit on how much an investor can lose on a trade. In the case of a stop-loss order, the position is sold at a predetermined rate – below the current market price for a long position, or above the current market price for a short position.

Stop-loss orders remove the user from the trade at a set price drop. In comparison, risk management tools allow the user to ride out any short-term drops in value, with the potential to benefit from a positive overall momentum of the position.

 

Manage the capital-to-trade ratio

One simple way traders can reduce the risk of accumulating excessive losses is to keep their capital-to-trade ratio under control. This is the amount of capital left exposed to losses in trades compared to the total amount of capital traders have available to themselves.

A sensible rule for traders to follow is to not exceed a capital-to-trade ratio of 10 per cent, and not to risk more than two per cent of the overall capital on a single trade. This doesn’t mean always taking very small positions – it means traders should hedge their risks on whatever positions they choose to take.

It is important that before traders even begin to trade, they make sure that they understand the risks they face. Once they have taken the time to do that, they can begin to contemplate these four ways to manage those risks and then start trading. This is an exciting time to be entering the world of trading, and these considerations should ensure that the trading experience is as enjoyable and profitable as possible.

 

 

 

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Out of office, home and away, moving up, moving on; when security goes AWOL

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By

Steve Bradford, Senior Vice President EMEA, SailPoint 

 

The financial services industry has one of the highest rates of insider data breaches, costing on average $21.25 million in the past year alone. Whether it’s an employee acting with malicious intent, or through accidental data mishandling, staff have access to sensitive information and systems that make them a constant vulnerability. And this threat only escalates when staff go on the move.

With the summer holiday season upon us, thoughts will be turning to well-deserved time off, travel and downtime. However, for many, especially in the financial industry, the notion of waiting until the summer months to sample a new life was not feasible. In the period following Covid, the industry has suffered at the hands of the Great Resignation as burnt-out employees left for new roles. As a result, research from PwC suggests that financial services leaders have had to prioritise employee retention amid the swathes of staff exiting.

This exodus is not just a threat to the workforce itself. It also results in greater threats to resilience, security and compliance. Ensuring that the doors to the organisation’s data are appropriately locked behind them is vital whenever employees are on the move. When a staff member leaves a bank or financial institution, security leaders must ensure they have not inadvertently handed over the keys to the safe as a leaving present. Revoking any and all access and privileges to company data must be a priority.

 

Don’t leave the door ajar 

Disorganised, ill-managed and manually-processed access requirements and identity management protocols are an open invite for security breaches.

However, it is not just those leaving for good that pose a threat. Recently promoted your long-serving payroll manager to a longed-for role in financial oversight? That positive move could result in entitlement creep, where the permissions to data, apps, information and systems she enjoyed in payroll follow her to her new home.

Permission creepers are those staff who collect permissions and access rights as they go through their career, picking up credentials to systems and data as they go. Of course, to restrict the opportunities for hacking, insider threat or illegal or incompliant activity, permissions should only be granted when relevant and required for an individual’s job. However, too many companies allow permissions to creep by not taking a proactive approach to access. This can result in toxic permissions combinations, where employees are granted inappropriate access to the systems, making fraud and error far more likely.

Even a simple summer holiday can provide an open-door opportunity. We are all conscious about signaling to would-be home burglars that we are going away on holiday, and we will take steps to protect our property in our absence. The same principle applies to businesses with staff out of the office on vacation – potentially logging in from insecure locations or signaling to cybercriminals that their attention is elsewhere.

The results of leaving the door ajar are costly. According to the IBM Cost of a Data Breach Report 2021, the average cost of a data breach in the financial sector is $5.72 million.

Permissions creep, unrevoked access and unmanaged identity provide the perfect conditions for the insider threat to propagate. As Gaurav Deep Singh Johar, of the Information Systems Audit and Control Association explained, “While these challenges are present in any institution, insider threats pose a greater risk for banks. There is a big reputational impact, thanks in part to increasing regulatory oversight.”

 

Don’t let permissions security set sail into the sunset

Financial organisations are complex landscapes, with labyrinthine corporate structures and siloes that cast a dark shadow over access and identity visibility. However, identity security technology is moving fast. Now, automated systems powered by AI and machine learning mean that permissions can be automated and access granted on a need-to-know basis, based on individuals’ employment status, roles, and responsibilities.

An automated system will quickly track down and disable ex-employees’ accounts and automatically halt permissions creep as employees move about the organisation.

The same technology can now also be even more diligent than that, monitoring access requirements based on any change in the workforce, like people being out of the office.

The evolving variety and fluctuating workforce mean that the insider threat can only be met with automated, streamlined identity security that moves as quickly as employees themselves. Without intelligent, streamlined identity governance, banks cannot ensure they are in a state of compliance, nor ensure cybersecurity in real-time. They also miss out on opportunities to improve operational efficiency and reduce the risk of fraud and error. Automation also ensures the accuracy and completeness of data sets so critical for keeping on top of compliance and delivering critical services.

As financial workforces are on the move, home and away and to pastures new, now is the time for banks to give identity security its time in the sun. Do not let shifting sands collapse the walls around you. Wherever your employees are coming from and going to, robust security and sustained compliance start with automated identity management.

 

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