“Top priority: creating a risk-aware culture”
Organizational silos, decentralization of resources and decision-making, inadequate forecasting, and lack of transparent reporting were cited as major barriers to effective enterprise-wide risk management. The need to create a risk-aware culture throughout the institution emerged as a top priority in the study – three-quarters of all respondents cited its vital importance – as banks struggle to develop a consolidated view of risk across business units and various risk dimensions.
“In light of recent events, there was strong agreement that managing risk effectively requires both top-down oversight and bottom-up involvement from front-line risk takers,” says Bill Schlich, leader of EY’s Global Banking & Capital Markets practice. “In order to create and instill a culture of risk awareness within banks, risk management must become everyone’s business.”
To do that, respondents agreed that the discussion of risk must be elevated to the strategic level with much closer collaboration across functions, business units and risk classes. Eighty-six percent of those surveyed indicated that their banks are implementing a variety of projects designed to provide a more comprehensive approach to risk. However, only 16 percent said they have a well-defined, shared vision of what it would look like.
Respondents consistently cited the need for better information flow and reporting in the area of risk. Poor data quality, gaps in data flow, and the sheer volume of data are just a few challenges banks face. Sixty-seven percent of executives indicated that they were under way with the process of implementing consolidated risk reporting across their organizations but only 9% felt they have truly been able to aggregate data across the enterprise. Survey participants agreed greater transparency, faster delivery and better synthesis of data must be top priorities.
For more information about creating a risk aware culture, read our leading practices for enterprise-wide risk reporting and view our slideshow: eight critical steps for holistic risk governance