Financial Services Ireland

SURVEY

Tenth annual EY/IIF Global Bank Risk Management Survey

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For the past ten years, EY and the Institute of International Finance (IIF) have monitored the banking industry’s approach to risk management through our annual surveys.

Our latest global bank risk management survey report, titled An endurance course: surviving and thriving through 10 major risks over the next decade, reflects the views of close to 100 banks globally, as well as EY’s Banking and Capital Markets leadership team.

The report covers a considerably broader array of topics than in previous editions, reflecting the shift in focus from financial risks (with banks now better positioned in terms of capital and liquidity) to broader operational and sustainability challenges. Explore last year’s survey.

While the survey is primarily relevant to CROs, it will also be of interest to other C-suite members, and to Audit and Risk Board Committees.

10 years of global bank risk management

As reflected across the ten years of global bank risk management surveys conducted by EY and the IIF, risk management within the global banking community has been on a transformational journey since the last financial crisis:

  • A decade of progress – banks are healthier than they were pre-crisis (in terms of capital, liquidity and risk management)
  • A decade of two halves – there has been a material shift from financial to non-financial risks
  • Amid a period of convergence, there are significant regional variations (as reflected in the RoE profile of banks in various regions – the post crisis banking RoE has rebased lower, but some regions (such as Europe) are particularly challenged) 

Near and medium-term risk management challenges

  • Enhancement to financial risks areas are generally at an advanced stage. There is much to do in managing new/ newly emphasised nonfinancial risks
  • Enhancements have been designed to reflect regulatory/ supervisory findings – in short time frames. The result is more effective, but certainly not yet efficient (too manual, cumbersome and expensive) – focus is on rationalising processes and increasing automation
  • Altering the talent strategy will be key (towards specialised skills around AI/ML; cyber etc)

10 risk management challenges for the next decade

The report also discusses the following broader, more complex set of risks and examines specific challenges and uncertainties for each, as well as evolving ways to manage these risks. There is a need to be more creative, predictive and efficient. The top ten challenges identified are:

  1. Weathering the likely financial downturn
  2. Operating in an ever-expanding ecosystem
  3. Protecting privacy to maintain trust
  4. Waging a cyber war in banks and across the system
  5. Navigating the inevitable industry transition to cloud
  6. Industrialising data analytics across the business in a controlled manner
  7. Delivering services to customers, clients and markets without disruption
  8. Adapting to the effects of fast-shifting geopolitics on banks and their customers
  9. Addressing the impact of climate change on banks and society
  10. Meeting emerging customer demands for customised, aggregated lifetime offerings

Download the full survey report below and, if you have a question about any of the issues raised, don’t hesitate to get in touch.

Cormac Murphy

Banking & Capital Markets, Sector Leader
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