Four themes influencing the risk management industry
In a world of increasingly packed schedules, RiskMinds is the one time a year that senior risk managers can gather together to share their experiences and discuss best practice across the full spectrum of risk management.
So what are the four themes that are changing risk management as we know, and how is RiskMinds covering them at the event this December?
Existential risk and the future for the banking business model
Banks as we know it are facing an existential crisis. Are we reacting to change quickly enough to ensure our business model is fit for purpose? Market changes, the threat of digital innovation, the rise of challenger banks and regulatory development are all coming together in a perfect storm. Risk managers know this, they can see the writing on the wall but what can they do about it? How can they measure this risk, quantify this risk and more importantly, how can they help their firm overcome existential risks before it’s too late?
This year we have a range of sessions that strike at the heart of existential risk including:
- Our CRO panel of challenger banks (Monzo Bank, Starling Bank and CYBG).
- Andrew Cross, Head of Enterprise Wide Risk at RBS will be giving his take on how the biggest risks to bank business models have evolved and how the risk function should be navigating change.
- Plus…The future of Europe casts an uncertain light on the future of banking as we know it so who better to examine the next practical steps and operational challenges for Europe, the UK and the rest of the world than Guy Verhoftsadt, Brexit Negotiator for the European Parliament.
Regulatory fragmentation
5 years ago, would the banking community ever have imagined a world where we are trying to fathom the regulatory implications of a Trump presidency in America and Brexit challenging the concept and direction of the European Union? Reflecting the rising tides of political nationalism, isolationism and protectionism, the regulatory themes du jour centre around deglobalisation and balkanisation. How fast will the pendulum in the USA swing back towards deregulation and what will this do to the global playing field? Will the rest of the world follow suit and what does this mean for global banks? Too many questions and not enough answers so far! The Basel Committee has been the guiding light in banking regulation since 1974. Are the changes we see today moving us into a period where Basel hibernates or, more worryingly, is this the beginning of the end for global regulatory cooperation?
The Global Risk Regulation Summit (Monday 4th Dec) welcomes presentations from decision makers representing the major regulatory bodies including: the Basel Committee, the ECB, The Bank of England, The Federal Reserve Board, The European Commission, the ACPR, the FCA and the Single Resolution Board. In addition, we have dedicated streams to FRTB, stress testing, IFRS 9 and recovery & resolution.
Some of our regulatory session highlights will be:
- Neil Esho, Deputy Secretary General at the Basel Committee on Banking Supervision will be guiding us through the next steps for “Basel IV”
- In response to concerns over divergence of international regulatory standards and the impacts on financial risk management, RiskMinds has brought together an international panel of regulatory experts representing North America, Europe and Asia. Participants will represent JP Morgan Chase, United Overseas Bank, Standard Bank Group, Accenture and the IBF.
- Howard Davies, Chairman for RBS, providing a board level assessment of the key regulatory trends shaping global risk management.
- Stefan Walter, Director General Micro-Prudential Supervision I, will be identifying current frameworks for supervision and laying out future policy.
- Andrew Gracie, Executive Director for Resolution at Bank of England will be providing an update on the Bank of England’s resolution planning strategy and timelines.
- For those looking for a one-day course to get to grips with the impending regulatory requirements and best practice implementation, there are three expert-led workshops:
o Capital Requirements from Basel 2.5 to FRTB workshop led by Rita Gnutti, Risk Management – Head of Internal Models Market and Counterparty Risk at Intesanpaolo
o Stress Testing: Theory and Practice workshop led by Jo Paisley, Former PRA Director & Ex Global Head of Stress Testing at HSBC
o Recovery and Resolution Planning Workshop led by Monika Mars, Managing Director MM Risk Advisory Services and former expert advisor on recovery and resolution plans at Erste Group
Embedding risk culture into the DNA of the firm
As Peter Drucker aptly put it, ‘Culture eats strategy for breakfast’ so it is only right that culture is taking up more and more of a risk manger’s time. How we can instill the right values across and organisation to drive the desired behaviours has become the million-dollar question. The traditional bonus culture, some would argue, caused bank employees to override their moral compass in search of greater profit but we are yet to replace it with something that drives employee behaviour in as compelling a manner. Risk managers are well used to being risk cops but to achieve a truly effective risk management culture, all areas of the bank have to be self-policing and every bank employee has to think like a risk manager. How do we achieve this? Does it have to be profitability vs social responsibility or can we find a way for each to incentivise the other?
Risk culture runs through the RiskMinds programme this year including the following highlights:
- Kweku Adoboli, one of the world’s most famous insider traders in recent history will be shedding light on How to identify and mitigate fraud before it’s too late.
- Baroness Eliza Manningham Buller, former Head of MI5 will be assessing human risk and teaching us how to lead in uncertain times, whilst instilling the right values and behaviours in the people we work with.
- Risk culture is now centre stage so for the first time ever we are hosting a dedicated ‘Risk Culture’ workshop (Monday 4th afternoon) explaining how you can efficiently join your front office with your back office whilst instilling the right organisational cultural and leadership behaviours.
Data and Digitisation- we have a reputation to protect
Data and digitisation have long been buzz words for the future of finance, but managing the risks associated with these is truly a daunting task. Data security and privacy are the driving forces behind financial regulation currently. So…how can we use data in a smarter way to meet compliance and risk needs and also to add more value to the business? These risks are less tangible so understanding and classifying them neatly will always be a challenge. For every risk silo (vendor risk, op risk, cyber risk, business model risk, regulatory risk to name a few) the risk manager needs to evaluate the business impact hand in hand with the operational risk and costs of that change. From the board’s perspective this all has the potential to decimate the increasingly fragile creature that is the firm’s positive reputation.
Here’s a snapshot of some of our data and digitisation sessions:
- Perhaps the most damaging threat to any bank’s reputation is a cyber-attack. ‘Freaky Clown’ one of the world’s leading cyber experts, with a 20+ year career in ethical hacking, will vividly demonstrate how he used to rob banks and how you can better defend your organization from a breach.
- Marcus Chromik, Chief Risk Officer & Board Member at Commerzbank, will be presenting a case study that assesses how big data and advanced analytics is changing the way we do risk management in the next 5 years.
- Using ground-breaking academic research, Doyne Farmer from the Institute of New Economic Thinking at Oxford Martin School will be bringing work in progress on how the availability of fine-grained data and large computational resources makes it increasingly feasible to understand systemic risk.
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