The warning message, "Iceberg, right ahead!" was received by the Titanic's lookout minutes before the ship collided with the iceberg on its maiden voyage in 1912.
And since then, that three-word sentence has endured a symbolic summation of dozens of unexpected events that ended in disaster.
The Titanic was considered unsinkable, and its builders and passengers were confident it could withstand almost any disaster. However, the ship's sinking demonstrated the hubris of human beings and the limits of technology.
Some see the tragedy as a warning against overconfidence and the dangers of disregarding nature. Some see it as a symbol of the end of an era and the beginning of a new, uncertain one. But the more profound meaning reveals that it can be unwise to trust manmade systems.
Financial Institutions Aren't Unsinkable in 2023
The largest ocean liner ever built was allegedly prepared to withstand almost any calamity. It took just two hours to sink.
Cue up 2023?
It took 48 hours for Silicon Valley Bank (SVB) to meet a similar fate.
We don't know the full scope of what caused SVB to collapse. But one thing is sure. For mid-level banks like SVB, things will never be the same, especially in the regulatory environment. Because what's likely to follow is increased regulatory scrutiny.
"We've seen this movie before," said David Scott, Senior Product Director at Veritas. "Suddenly, without warning, banks fail. We saw this with the financial crisis in 2008. We've seen it play out in different ways since then. And it always led to increased regulation, or at least attempts to do so," he observed.
Cryptic Crypto: Caveat Emptor
There were news reports that SVB had crypto assets which might have played a role in its demise.
Accordingto the New York Times, Circle, a company that issues stablecoins, one of the linchpins in crypto trading, kept some of its cash reserves at Silicon Valley Bank. After the SVB failure and its frenzied attempt by depositors to withdraw funds, Circle revealed that $3.3 billion of its $40 billion reserves remained at the bank.
"Crypto's unregulated status makes it a risky proposition for regulated banks, and that could easily lead to more regulations and enhanced scrutiny within the financial institutions with cryptocurrency assets," said Chris Stapenhurst, Senior Principal Product Manager at Veritas.
A Billion Here, a Billion There. That’s Serious Money
One billion dollars is bracing. Especially when you're losing it. And the SEC has enough muscle to inflict that kind of pain. Your organization can reduce that risk with robust surveillance tools to ensure that new financial products like crypto cannabis and SPACs meet the demands of regulators before a crisis arises.
Increased enforcement action has resulted in $6.4 billion in fines issued in 2022 and more than $1 billion in a single action in 2022.
“With crypto, in particular, there have been increased fines across the board and with class action lawsuits by investors,” Stapenhurst explained. “Financial institutions need to prevent activities like selling away, personal securities transactions, off-channel signalling, market abuse, fraud, and money laundering.
More robust electronic communication surveillance will be needed to detect violations.
