Much has been done to change the landscape of prudential risk management since the financial crisis of 2007/8. This crisis triggered heightened awareness of the importance of genuinely robust risk management and has led to substantial structural changes within firms. Whilst great strides have been made, there is still much to do to fully address the regulatory and operational challenges firms face and manage the balance between meeting the regulatory change agenda (e.g. FRTB, BCBS239, Basel IV, IFRS 9/CECL) and supporting the ongoing operational requirement to:
Whilst managing these burdens, Chief Risk Officers and Treasurers also need to address the commercial and technical challenges of the current day and also seek out the opportunities to enhance risk capabilities these challenges present. Challenges such as the competition from Fintech/InsureTech, delivering Open Banking/PSD2 and the demand for digital products will be time consuming to overcome but also offer risk functions greater opportunities to understand customers, reduce costs and provide better financial products.