Financial Services businesses rise, fall or run on the spot by their ability to price and manage risk. Unlike almost any other sector, their business is risk. Manage that risk well, and they take their opportunities and grow, confidently and responsibly. Do it badly and they boom and bust, stagnate, or cause more pronounced shocks to the real economy.
But now, just as firms need risk management to deliver, they find it battered, bruised and defensive. Risk management needs to change. But for that to happen, the risk managers need to come out from their silos and reinvent themselves as partners of the rest of the business. Only then will risk management become a discipline that everyone builds into their work.
Financial services firms need an approach to risk management that truly understands the threats and opportunities faced by the business. And to bring this vision to life, we believe it needs to embrace five new ways of working:
A fully switched on risk strategy able to respond to change around it.
Broadening the scope of risk management to adapt to fundamental changes in markets, business models and transaction.
Being fast on your feet
Using technology and people to see risk coming, contain it early and adapt quickly. Skills are required to handle not just credit market, operational and liquidity risk, but other kinds, like cyber, reputational and geopolitical risk.
Taking a more connected view
Working across teams and disciplines throughout the firm to get an overall view of risks facing the business and put these in the context of both the broader corporate strategy and those working on individual transactions.
Setting us an operating model that’s right for your business
Removing inefficiency by bringing risk back to the basics:
Moving the risk function from gatekeeper to partner
Taking a more significant role both in business strategy and day-to-day decision making.
So how can you get risk-ready? Our report sets our views on what the first steps are for a new kind of risk management. But we’d also love to know what you think.