Since 2006, many boards have appointed chief data officers to work closely with their chief risk officers to evolve the organization’s culture to a data-driven, risk management organization. Read these six steps to help your organization evolve to a successful data-driven organization.
A balanced risk appetite – tightly integrated with the business strategy – is paramount in this economy. David Gumpert-Hersh, Vice President of Credit Risk Management, Wesom Credit Union, shares his advice for setting and implementing a balanced risk appetite at a nonprofit where the ‘customers’ are the shareholders.
According to Boaz Galinson from Bank Leumi, it’s essential for CROs to define a risk appetite – the amount of risk embedded in the strategic plan. The challenge, he says, is translating that strategy into lower-level actionable plans, decisions and actions. A risk management culture, based on an enterprise risk tolerance statement, can be the most challenging tasks CROs face.
Firms with an approach that aligns with the real-world will create growth, while firms with a misaligned approach will shrink relative to each other. The risk attitude that aligns well will eventually control more of the market’s resources. Read this Harvard Business Review opinion on how risk attidude – and appetite – affects your firm.
Viewers from the outside may not fully appreciate or understand these complexities of banking in the 21st century. But is complexity a defense for a perceived unwillingness to change? The 2012 EIU report on accountability in financial services has uncovered how C-level executives view their responsibilities – beyond maximising profits.
Many exercises designed to stem systemic risk also increase regulatory power to punish banks that contributed to the 2007 – 2009 financial crisis. This solution has some obvious flaws.
In this short video, Clark Abrahams briefly defines risk appetite, outlines the need for a clearly articulated risk appetite statement, and then discusses the key components of a risk appetite statement
The recent disclosure of a multibillion-dollar trading loss at JPMorgan Chase reminds us again of the challenge and complexity of risk management and who is ultimately responsible.
When organizations and systems appear to be performing well, when problems develop slowly over time, and when a variety of systematic lapses occur, even the best and the brightest simply do not notice gaps in information that would indicate a looming crisis.
Take a look at the news lately and you’ll see big names in financial services struggling to recover from serious reputation damage. Why? Unclear risk appetite messages were cascaded down the chain of command. Take a new look at the message you are sending and the message being received.