The future of bank risk management

# A McKinsey & Company Article

Philipp Härle, András Havas, and Hamid Samandari of Mckinsey & Company write in their article "Thhe Future of bank risk management"

Direct link article : Mckinsey.com

“Banks have made dramatic changes to risk management in the past decade—and the pace of change shows no signs of slowing. Here are six initiatives to help them stay ahead.”
  • Regulation will continue to broaden and deepen
  • Customer expectations are rising in line with changing technology
  • Technology and advanced analytics are evolving
  • New risks are emerging
  • The risk function can help banks remove biases
  • The pressure for cost savings will continue

And to prepare for the future, the optimal (risk) function would have the following attributes and capabilities

  • full automation of decisions and processes with minimal manual interventions
  • increased reliance on advanced analytical models to de-bias decisions
  • close collaboration with businesses and other functions to provide a better customer experience, de-biased decisions, and enhanced regulatory preparedness
  • strong advocacy of corporate values and principles, supported by a robust risk culture that is clearly defined, communicated, and reinforced throughout the bank
  • a talent pool with superior advanced-analytics capabilities

 

The TMR Takeaway

TMR Global could not agree more with McKinsey, Risk functions need to transform their operating models and need to start that with digitisation of core risk processes. this digitisation needs to be a ground up re-think of risk across all three lines of defence focussing on the key barriers to risk penetration throughout large organisations;

  • Simplication of Risk frameworks and terminologies
  • Structuring business assurance layers to be risk aware
  • Embed and promote risk over compliance
  • Automate Risk and Assurance processing and reporting
  • Emphasise Risk ownership and accountability

 

TMR Global's QC3 application exactly fills the niche that McKinsey are highlighting. By approaching risk with a blank slate, TMR Global has re-imagined risk and digitally integrates it from Assurance, Governance thorugh to Internal audit lines.

 

Contact Us