As technology advances and the current focus on the financial sector puts stress on institutions to enhance their capabilities, their risk management functions must evolve, according to EY’s ninth annual global bank risk management survey.
The survey found that boards, senior management, chief risk officers and other key executives would need to adapt to a risk environment and risk profile; leverage risk management to enable business transformation; deliver risk management effectively; and manage and recover from disruptions.
Doug Nixon, EY Oceania Financial Services Risk Management leader, said Australian banks were in a different stage in the regulatory cycle compared with their global counterparts, and institutions were facing pressure to enhance their capabilities.
“We believe the best prepared risk functions will be those that understand that the Australian financial sector has entered a new phase, and can clearly establish and execute a strategy for the risk function that is not solely focused on regulatory compliance,” he said.
The survey also showed that risk management had a central role to play in combating cyber attacks and weather-related disasters.
Nixon said the scope of risk functions would continue to grow, and risk managers were also expected to have a stronger voice in conduct and culture matters.
“They are also required to have enhanced oversight of first-line risk activities, oversee significant investment in financial crime and anti-money laundering infrastructure, and support the business in setting quantitative metrics and deploying risk appetite,” he said.