^{By Larry Bajek, Vice President, Strategic Wealth Solutions}

At most financial institutions, asset servicing operations often look stable on the surface. Transactions settle, reconciliations clear, and corporate actions process on time. The systems function, workflows are familiar, and the team is experienced. From the C-suite, it all looks like a well-oiled machine — a reliable engine driving the business day after day.

But this sense of calm is often misleading. Underneath familiar workflows and predictable routines, risk is quietly accumulating—created by manual interventions, siloed processes, fragmented data, and outdated supervisory practices. In a rapidly evolving regulatory environment, with complex global withholding rules and heightened investor expectations, financial, reputational, and compliance risks are compounding just out of sight.

And for the most part, it is.

Yet operational risk in asset servicing rarely announces itself. Underneath familiar workflows and predictable routines, risk is silently accumulating – created by too many manual interventions, siloed processes, fragmented data and outdated supervisory practices. In a rapidly evolving regulatory environment, with complex global withholding rules and heightened investor expectations, financial, reputational and compliance risks are compounding just out of sight.

Errors seem minor. Losses appear manageable. Issues are often absorbed and dismissed as the cost-of-doing-business. This illusion of control is easy to maintain—until something slips through the cracks.

Where risk accumulates, and why it’s accelerating

The reality is, asset servicing has evolved. Today’s corporate actions are more frequent, more complex, and more consequential to client outcomes.  Yet, too often, they are still managed through email chains, spreadsheets and disconnected teams.  These processes may function much of the time, but they introduce significant vulnerabilities:

• Delays in entitlement instructions and submissions
• Errors in client elections and misclassification of income types
• Missed deadlines leading to lost client opportunities and reputational hits

When the inevitable strikes

It often takes just one missed corporate action to expose the underlying fragility. A deadline is overlooked. A notice is misrouted. An instruction isn’t executed. Suddenly, clients are impacted—some losing entitlement to shares or cash, others missing out on important elections. Reputational fallout is immediate, often followed by regulatory scrutiny, compensation payouts, and board-level escalations.

An incident that starts as a process failure, may quickly become a leadership issue: why wasn’t the risk detected earlier? Why weren’t better controls in place? Why was reliance on manual workarounds allowed to persist? Why were loss patterns normalized rather than addressed?

These are not theoretical risks—they are played out across the industry every day. And in an era of heightened client expectations and 24/7 market scrutiny, the margin for error has never been thinner.

Discover where hidden risks could be costing your business.

The real lesson for leaders

The warning signs are easy to spot: rising exception volumes, growing operational losses, slower client response times, and an over-reliance on manual intervention. Yet, because “the system works - most of the time”, the pressure to overhaul it rarely feels urgent—until it's too late.

The key insight? These are not one-off failures, but clear symptoms of systemic fragility. Treating recurring issues as routine only serves to normalize the exact conditions that can trigger major operational failures.

The change that’s needed

True resilience isn’t about reacting quickly, it is about deliberately engineering risk out of the system. This means moving beyond passive monitoring to adopt proactive escalation models, consolidating data into a single authoritative source for all processes, embedding automation to flag anomalies in real time, and fostering cross-team accountability for managing exceptions and near-misses.

Building true resilience also means shifting cultural attitudes. Every operational error—no matter how minor—should trigger a learning cycle. Losses shouldn’t be accepted as an inevitable overhead, but as signals that a process needs attention and improvement.

For decision-makers, the mandate is clear: ensure your asset servicing operations are not only running efficiently—but are prepared for the future. That demands investment in modern infrastructure, stronger vendor oversight, and empowering teams to question and improve legacy processes.

A wake-up call for the industry

Complacency is the greatest risk facing today’s financial operations. Asset servicing is foundational, but that doesn’t make it immune to disruption. In fact, its critical importance calls for heightened strategic focus.

The next operational crisis is unlikely to come from an unforeseen black swan event. It will come from overlooked routines, persistent inefficiencies, and deferred decisions. The looming threats in asset servicing don’t have to turn into a crisis—but they can only be addressed with the right systems, technology, and leadership in place.

Now is the time to challenge assumptions, enhance controls, and prioritize operational risks—not just an operational afterthought. Because in today’s environment, “just another day” can turn into a crisis with lasting consequences.

Talk to us about future-proofing operations against the next disruption.