Report: Data Overload Plagues Bank Chief Risk Officers and Risk Committees

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Ernst & Young report captures global banking leaders' discussions on new strategies for bank risk professionals and boards to weather Eurozone crisis and emerging risks.

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The only way to remove constraints and make real progress on the risk front is to shift the culture within a financial institution to focus on risk awareness and transparency.

Chief risk officers and bank risk committees are overwhelmed with data, which can lead to breakdowns in risk management, according to a new report, Improving risk identification, by The Bank Governance Leadership Network (BGLN), led by Ernst & Young and Tapestry Networks.

As banks rebuild their businesses and implement sophisticated risk assessment technologies, they will place a premium on turning data points into real information and determining what information should be used to identify and assess institutional risk. The Viewpoints report recommends three strategies for banks to improve risk identification and evaluation:

►    Foster a culture that identifies and talks openly about potential risks
►    Improve transparency regarding the interconnectedness of the financial system
►    Increase communication between regulators and supervisors around emerging risks

“The only way to remove constraints and make real progress on the risk front is to shift the culture within a financial institution to focus on risk awareness and transparency,” said Bill Schlich, Ernst & Young Global Leader for Banking and Capital Markets.

The BGLN’s two additional reports compile the most significant emerging risks weighing on global banks. In addition to the unfolding Eurozone crisis, the risks identified in nearly 50 discussions with global banking leaders fit into four categories:

1.    Funding and liquidity
2.    Regulatory uncertainty
3.    Cybersecurity and geopolitical risk
4.    The general economic picture

Schlich added: “Given the scenarios that could play out, risk managers, boards and supervisors should be mapping potential exposures and filling gaps resulting from their analyses. A renewed focus on mitigating risk ensures that an institution can react more quickly as macroeconomic, geopolitical and regulatory uncertainty dissipates.”

Two related reports, Implications of the Eurozone crisis and Top and emerging risks for global banking, are available for download here and 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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This news release has been issued by Ernst & Young LLP, a member firm serving clients in the US.

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