Here, we welcome Lauren Duijvenstijn, Market Risk Officer at ING, to discuss their vision of how risk management will transform in the years to come.
Sometimes I wonder if, with all the requests that we get from different departments and programs, are we still able do our job? This thought only touches upon my mind for a split second. Because all these requests, such as preparing for the next 2018 EBA stress test, inclusion of behavioural cash flows in the ECB Short Term Exercise, or compliance with the next EBA IRRBB consultation paper, are our job! Regulatory requests focus more and more on data and uniformity, whilst at the same time every request is new and different. Risk managers are fixated on control and sometimes people believe you are most in control with the least amount of change. However, the world around us is constantly changing, leading to both new regulatory requirements and new business models. Risk should not be the limiting factor in this change, but a catalyst for opportunities.
Risk should be an integral part of the company culture where everyone thinks about risk and feels responsible for it.
Risk management in the future will be data-driven by experts within the business who are backed by IT and simple models which can be explained easily to the general public. The complexity of this concept lies in the fact that risk should be an integral part of the company culture where everyone thinks about risk and feels responsible for it.
To make this work I envision multi-disciplinary teams within the business that have their own purpose. Teams should know their responsibility in reaching the company’s overall purpose which should be set carefully by management. The ‘why’ of large risk initiatives should also be linked to the company’s and individual teams’ purpose and communicated broadly. Risk management should be seen as a service where models give insight in behaviour but are not leading, and outcomes must always be challenged. Also within risk the models used should be challenged from the business point of view and not solely by model validation.
Within an organisation there is always a lot of potential and innovation, the challenge is to recognise the best practice, to asses it and when possible use it elsewhere in the company. Risk should be included from the very first steps in developing new business ideas (in the MVP and POC). This will create a velocity for the company where flexibility, innovation, opportunity and risk come together. Increasing velocity is key when you want to survive as a bank in a world with Apple Pay, Google Wallet, Amazon and WeChat. Hence maybe it is possible in the future to even sell our risk services to these companies and generate additional fee income. As risk professionals, we need to think with our clients, our company and shareholders in order to be the future.
