Focus on Risk Governance: Four Ways the Global Banking Industry is Dealing with Vulnerabilities Following the Financial Crisis

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Ernst & Young survey reveals how global banking executives are fixing weaknesses revealed by the financial crisis and honing their approach to risk governance.

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For many banks, the financial crisis has led to a re-thinking of risk governance. The focus is on a top-down, enterprise-wide approach to risk management with risk reporting to the board moving to a more regular quarterly or monthly basis.

Global banking executives are focused on risk governance and risk appetite in the wake of the financial crisis, according to a survey conducted by Ernst & Young’s regulatory and risk professionals.

Patricia Jackson, head of Ernst & Young’s Prudential Advisory practice in Europe, Middle East, India and Africa, said: “For many banks, the financial crisis has led to a re-thinking of risk governance. The focus is on a top-down, enterprise-wide approach to risk management with risk reporting to the board moving to a more regular quarterly or monthly basis. Banks are also stress-testing for the implausible as a direct result of last year’s events.”

In March 2009, as part of the review of implementation of the recommendations in the Institute of International Finance’s (IIF) July 2008 Market Best Practices report, the IIF asked Ernst & Young to conduct a survey of banking executives to gauge the gaps against the recommendations, and identify what they are doing to bridge them.

Four key findings from the survey:
1. The focus is on risk governance and risk appetite

2. Gap analysis was driven by a top-down approach with significant board and senior management involvement

3. Banks lack agreement on degree of change needed in response to the financial crisis

4. The time scales for dealing with gaps vary and resources are facing major pressure

Read more about these findings and view the full report here.

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.

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