- Survey’s findings were presented at IIF-hosted launch event in Washington
- 73% of global CROs view cybersecurity as the top year-ahead risk heightened by geopolitical tensions
- CROs will need more critical thinking skills, stronger analytics and increased organizational agility to manage current and future risks
The results of the 13th annual EY/Institute of International Finance (IIF) global bank risk management survey of chief risk officers (CROs) highlight the wide range of risks CROs must think about and prepare for. While many familiar risks remain at the top of CRO agendas, the threats are constantly changing and assuming new forms. The survey of 86 global banking CROs, presented at an IIF-hosted launch event in Washington on Tuesday, 13 February 2024, also highlights how the CRO’s role is expanding and evolving. To manage current and future risks, CROs will need more critical thinking skills, stronger analytics and increased organizational agility.
The ongoing proliferation and continuous evolution of risks in the banking industry – highly volatile, intricately linked and emerging from seemingly everywhere – have made today’s market uniquely challenging for CROs. The top risks in our annual survey reflect the durability and prevalence of a few perennial threats, while also suggesting the diverse nature of banks’ risk profiles today.
Cybersecurity continues to dominate the agenda, and remains the top-priority risk for CROs over the next 12 months, according to 73% of respondents, presenting a perennial moving target as attacks grow continuously more sophisticated and originate from new vectors.
Concerns about meeting regulatory rules and supervisory expectations, tied with operational resilience as the second-most urgent risk (36%) for the coming year. Meanwhile, emerging risks that will be most important over the next five years include climate and nature-related risks (56%) as well as the use of machine learning and AI (53%).
Geopolitical trade tensions may lead to increased counterparty credit risk for institutions with operations in impacted regions. Geopolitics could also test operational resilience if banks are forced to exit certain markets.
Our survey results suggest an urgent need to align the risk management operating model, from the boardroom to the front lines, for today’s volatile market and its constantly evolving risks.
Specifically, the findings emphasize the need for:
- An emphasis on critical thinking skills: hiring and training risk professionals who can see across traditional risk disciplines, synthesize insights from different data sets and offer detailed guidance without losing sight of the big picture.
- Increased organizational agility: instilling flexibility through adaptive capabilities and processes, deploying talent and taking action to address shifts in risk priorities.
- Further adoption of advanced technology: automating core processes (such as fraud monitoring, controls and reporting) to more quickly identify and track risks and free talent for higher-value tasks.
- Stronger data management and analytical capabilities: promoting forward-looking risk visibility and enabling pattern recognition through predictive modeling, scenario planning and data visualization.
Commenting on the findings of the survey, Savvas Pentaris, Partner, Financial Services Leader, EY Cyprus, said: “The results of the 13th annual EY/IIF global bank risk management survey of CROs highlight the wide range of risks CROs must think about and prepare for. As these challenges are likely to persist going forward, banks will need to further strengthen their agility and resilience, by continuing to build the necessary capabilities and infrastructure, which will allow them to identify, manage and report on risks. For CROs, this means developing new skills and leveraging technology more effectively.”
