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.
New York, NY (PRWEB) October 10, 2012
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.”
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