The way the banking industry has evolved in recent years, in addition to good financial results, digitization and increased customer satisfaction, has brought new risks that, if not addressed, can affect the maintenance of efficiency and the achievement of objectives. Through the lens of the regulatory system and beyond, banks tend to place strategic importance on their risk management processes, but the risks they face today require a rethinking of their approach.
In addition to the control system based on the principle of “three lines of defense”, adequate risk management involves an integrated vision of them at any level within the bank, a dynamic approach in determining risk appetite and tolerance thresholds, as well as the use of a methodology based on good professional practice. statistical concepts and principles specific to the available data that will be used to quantify risk.
According to PwC’s 2022 Global Risk Study, the top 3 risks facing the banking industry are market risk, cyber or data risk, and business or operating model risk. Each of these risks can have a significant impact in terms of the evolution of portfolios and financial performance, regulatory compliance and the institution’s reputation. In this context, banks’ risk management capacity and sustainability are key keys to achieving business goals.
The said report also shows that institutions that have an integrated risk strategy expect faster revenue growth and better results, such as higher share prices, improved returns on investments, gaining customer and investor confidence, increased resilience and faster decision-making.
The main risks in the focus of attention of banks in 2022
In addition to industry regulatory and credit risks, banking industry respondents place significant emphasis on market risks, cybersecurity and data governance, competition from alternative suppliers, and climate risks.
Read the rest of the article on the PwC Romania blog
The article is signed by Eliza Băiașu, Senior Manager, Head of Risk Modeling and Data Assurance, and Valentina Mănăsescu, Senior Manager, Head of Banking, Risk and Control
Source: Hot News RO
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