Ernst & Young CFO Report: 6 Areas of Risk Management Get Banks' Attention As Enhanced Capital Requirements Loom Closer

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Ernst & Young’s newest CFO report outlines how the global banking industry is approaching capital management and risk management in uncertain times.

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Regulatory changes will likely require banks to increase their capital levels and hold higher-quality capital.

The mix of certain products and businesses is likely to change as banks develop a more nuanced understanding of risk and capital requirements, according to Ernst & Young’s latest survey of global bank chief financial officers (CFOs). The survey comes at a time when recent and pending financial reforms are creating uncertainties in the banking industry.

“Regulatory changes will likely require banks to increase their capital levels and hold higher-quality capital,” said Peter Davis, a principal at Ernst & Young. “While uncertainty exists over the final requirements, institutions are already taking steps today to prepare for the new regulatory environment.”

In the post-financial crisis era, banks recognize that the quantitative risk models many had relied upon are no longer adequate. The survey found that CFOs, chief risk officers and their respective organizations are coming together to focus on six key areas of risk management:
1.    Reassessment of business strategy
2.    Analysis and implementation of capital optimization opportunities
3.    Monitoring and revision of capital adequacy goals
4.    Reduction of the complexity of business operations and rationalization of legal entity structure
5.    Improvements in reporting
6.    Improvements in data quality and systems

Read more about the CFO report and watch video of Peter Davis discussing what the report revealed about banks’ capital management and risk management strategies.

About the Ernst & Young Global Banking & Capital Markets Center
In today's globally competitive and highly regulated environment, managing risk effectively while satisfying an array of divergent stakeholders is a key goal of banks and securities firms. Ernst & Young brings together a worldwide team of professionals to help you achieve your potential — a team with deep technical experience in providing assurance, tax, transaction and advisory services. The Center works to anticipate market trends, identify the implications and develop points of view on relevant industry issues. Ultimately, it enables us to help you meet your goals and compete more effectively. It's how Ernst & Young makes a difference.

About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

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Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

This news release has been issued by Ernst & Young LLP, a member firm serving clients in the US.


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