The EY Global Risk Management Survey reveals that the banking industry today is volatile and full of risks, which poses many challenges for risk management leaders. Conducted in collaboration with the Institute of International Finance (IIF), the survey questioned directors of risk management or other senior executives at 86 banks in 37 countries between June and September 2023. Of the participants, 12% belonged to world-class banks.
Most participants highlighted cybersecurity risks as a top priority, said Ken Mark Agustin, senior manager, at the EY Luxembourg annual banking conference. Nearly three in four relationship managers (73%) cited cybersecurity as an area that would require special attention, far ahead of the second most important issue: implementing regulatory rules or expectations from supervisory authorities (which comes 37 percentage points behind, cited by 36% of respondents).
In previous surveys, “traditional financial risks” such as credit risk, liquidity risk or interest rate risk tended to be at the bottom of the list. “That doesn’t mean they’re any less important. It’s simply that over time, banks have become more comfortable with the governance, policies and risk management appetite that they implement with respect to these traditional financial risks. , underlined Mr. Augustin. But due to recent events – increased volatility, market uncertainty, geopolitical situations – these traditional financial risks are “moving up the priority list”.
The survey also found that 69% of respondents said cybersecurity risk was the issue that would need the most attention from the board.
66% say liquidity risk is a major risk
Looking specifically at financial risks, two-thirds (66%) of CROs cited liquidity or funding risk as a top risk.
Climate risk, an important consideration
For more than half of chief risk officers (56%), climate risk and nature risk will be the most important “emerging risks” over the next five years.
Process automation to drive transformation
Three-quarters of banks (74%) said they plan to accelerate digital transformation over the next five years through process automation (including intelligent automation), the survey reveals.
However, 54% cited the scale of change needed as the main constraint, followed by limited budgets (48%).
This article was originally written in English, translated and edited for the Paperjam website in French.
