Risk Management Association, Oliver Wyman Survey Finds
Growing Demands from Financial, Non-Financial, and Strategic
Risks
PHILADELPHIA and NEW
YORK, Dec. 1, 2022 /PRNewswire/ -- Chief Risk
Officers are balancing a wide range of demands heading into 2023 –
a year in which many emerging risks may be realized, the CRO
Outlook 2023 study by the Risk Management Association and global
management consultancy Oliver Wyman
has found. In addition, North American bank CROs representing
institutions with assets ranging from $25
billion to over $1 trillion
say economic worries and the need to prepare for potential
recession are piling on top of non-financial risks like consumer
compliance, cyber threats, and climate risk.
Top risk priorities
(Percentage of respondents
citing each among their top five priorities)
1. Recession
readiness
|
52 %
|
2. Consumer
compliance
|
48 %
|
3. Cyber
risk
|
43 %
|
4. Fraud/financial
crime
|
39 %
|
5. Operational
resilience
|
32 %
|
CROs also see additional risks approaching. The most frequently
cited emerging risks range from regulation to volatile interest
rates to competitive risks from disrupters.
Top emerging risks
(Percentage of respondents
citing each among their top five emerging risks)
1. Change in regulatory
focus/intensity
|
69 %
|
2. New interest rate
regime/inflation
|
62 %
|
3. Recessionary
environment
|
51 %
|
4. Disruption by
challengers
|
42 %
|
5. Heightened consumer
compliance expectations
|
42 %
|
Worries about the recessionary environment and heightened
consumer compliance expectations are new entrants to the survey,
now in its second year. Eighty percent of CROs expect competition
for deposits will increase in 2023, creating potential funding and
liquidity risks.
Climate and ESG risk also remain high on the CRO risk
agenda.
Operational resilience a key
focus
Faced with these challenges, CROs remain committed to improving
their firms' operational resilience. While the industry as a whole
was able to carry out its vital role despite the challenges of the
pandemic, there is broad recognition that more work is required to
increase preparedness for faster-moving and more idiosyncratic
disruptions.
Top operational disruptions identified by respondents include a
variety of third-party disruptions (93%), data corruptions (for
example, those caused by ransomware) (70%), and internal technology
failures (55%). CROs see strong business reasons for improving
operational resilience. Business concerns including customer
experience and changes in business or operating models are among
CROs' most-often-cited reasons to improve resilience.
A packed priority list
Bottom line: CROs are facing extraordinary demands on their time
and attention, as they add critical financial risks to a lengthy
list of operational concerns. "At RMA, we are focused on supporting
Bank CROs and all financial risk professionals as macroeconomic
headwinds create further challenges," RMA President and CEO
Nancy Foster said. "Risk officers
have their fingers on the pulse of threats to their companies'
success – and on opportunities that lie in change. The results of
this survey serve as a guide to leaders throughout banks on the top
risks they face."
CROs will have to navigate a complicated balancing act between
financial, non-financial, and strategic risks as they help steer
their banks through the challenges ahead. "Balancing an even fuller
agenda is going to be the main challenge for CROs in 2023,"
Oliver Wyman Partner Mike Duane
said. "Investing in talent and ruthless time prioritization are
going to be critical for CROs. Making space to address
recession-related concerns without dropping the ball on critical
operational and strategic risk issues will be among their main
challenges in 2023."
About the Survey
The survey was conducted in the summer of 2022. More than 40
bank CROs from North America
participated, representing institutions with $25 billion to more than $1 trillion in assets.
About the Risk Management
Association (RMA)
Founded in 1914, the Risk Management Association is a
not-for-profit, member-driven professional association whose sole
purpose is to advance the use of sound risk management principles
in the financial services industry. RMA promotes an enterprise
approach to risk management that focuses on credit risk, market
risk, and operational risk. Headquartered in Philadelphia,
Pennsylvania, RMA has 1,600
institutional members that include banks of all sizes as well as
nonbank financial institutions. They are represented in the
Association by 35,000 individuals located throughout North
America, Europe, Australia, and Asia/Pacific.
About Oliver Wyman
Oliver Wyman is a global leader
in management consulting. With offices in more than 70 cities
across 30 countries, Oliver Wyman
combines deep industry knowledge with specialized expertise in
strategy, operations, risk management, and organization
transformation. The firm has more than 6,000 professionals around
the world who work with clients to optimize their business, improve
their operations and risk profile, and accelerate their
organizational performance to seize the most attractive
opportunities. Oliver Wyman is a
business of Marsh McLennan [NYSE: MMC]. For more information, visit
www.oliverwyman.com. Follow Oliver
Wyman on Twitter @OliverWyman.
View original
content:https://www.prnewswire.com/news-releases/bank-chief-risk-officers-under-increasing-pressure-as-recession-looms-301691370.html
SOURCE The Risk Management Association