Canadian banks must reinforce strategic agility in the era of resilience

Canadian banks can build resilience by embedding strategic agility into risk management, governance and growth decisions.

In brief

• Canadian banks can build strategic resilience by making agility central to risk management, governance and enterprise decision-making.
• In a volatile environment, resilience depends on stronger scenario planning, clearer oversight and faster responses to disruption.
• Banks that refresh ERM and align strategy to shifting global risks can protect value and pursue growth with greater confidence.

Resilience is a fundamental duty for Canadian bank leaders. It stems from greater agility.

Embracing agility is very important for banks seeking to thrive in a dynamic environment. Reframing and strengthening risk management can build the agility banks need to be responsive in the face of opportunity.

Resilience to shocks is becoming increasingly important, and EY research shows geopolitics will continue shaping the global operating environment going forward:

3. Risk and opportunity have a new look and feel.

Risk events are more frequent and compounding. Reports show geopolitical risk as measured from public sources has risen in the last 10 years, being up higher in the lead-up to the United States' military intervention in Venezuela than just prior to the Russian invasion of Ukraine¹. Meanwhile, Europe is at a competitive crossroads, exacerbated by the conflict in the Middle East, and economic security remains a geopolitical theme for countries in Asia Pacific. These added layers of friction don’t mean the world is de-globalizing; they do make the case for a fundamental rethink of what a globalized operating system needs to manage risk overall. 

What does that mean for Canadian banking? 

Consider how the resulting shift in global norms, rules and regulations may affect trade relationships, industrial policy and the geopolitics of scarcity (think water, critical minerals, debt capital, natural resources, etc.). These factors must be addressed within strategies, ERM and investment portfolios, and prioritized differently in this environment. That includes reconsidering risk postures for current realities and possible future scenarios. 

4. Anchoring governance on structural trends is more reliable than political headlines.

The volume of geopolitical change could tempt banks to adapt governance in line with political cycles. So stay focused on underlying structural trends as the broader barometer (e.g. right-shoring, immigration sentiment) versus elections. 

What does that mean for Canadian banking? 

Actively monitor geopolitics and tie trends to your strategy and operations. This helps organizations stay grounded in why and when reactions are needed. Because geopolitics cuts across every aspect of the bank, it must be embedded into an ERM fabric that transcends organizational silos to enable agile and effective responses.

5. Future success depends on effective risk oversight.

Even the best risk frameworks may need a refresh to enable agile action plans and decisions. Who is tracking volatility, and are geopolitics adequately covered in that scan? Where does responsibility ultimately live within the businesses and on the board? How will the bank dashboard risk effectively with so many external triggers now influencing the market daily? These kinds of questions reinforce the need to fortify risk management and find new ways to bring processes and people together 

What does that mean for Canadian banking? 

In a shock-prone environment, banks need to systemize agility, creating the capability to monitor, communicate and track a variety of risks. Reviewing risk management to close gaps is fundamental to institutional and industry resilience and should include comprehensive scenario planning as well as no-regret action plans that people are trained on, familiar with and ready to implement quickly.