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Getting better oversight of risk controls was crucial for this global bank
It’s June 2017. Our global banking client called us with an urgent request: can you facilitate a risk assessment across the entire bank and then put in place any changes needed to our risk management processes? And can you do it in eight months?
The risk landscape for banks is immense – think credit, liquidity, technology, compliance, reputation, conduct. The implications for getting it wrong can be hugely damaging to the business, let alone the public trust in the capital markets.
On a mission
We sent in a 20-strong team from across our Risk Advisory practice to manage and facilitate the huge programme to assess inherent and residual risk across over 230 businesses, analysing 22,000 risks and 40,000 controls. Technical interlude: inherent risk is just the level of risk a bank faces assuming it doesn’t have any controls in place – the residual risk meanwhile is the level of risk remaining after the bank has put in place all the checks and controls. Imagine rock climbing without any safety equipment (inherent risk), and then climbing with a harness and helmet (residual risk).
A project like this meant interacting with senior stakeholders in teams across the whole bank to ensure that the various teams could understand and quantify the level of risk in all processes, as well as the controls that would need to be put in place to mitigate these risks.
A huge breakthrough
So what did we do? We developed several risk solutions, including a new way of representing the risk profile of the entire global banking organisation in one dashboard - this showed the level of risk (exceptional, high, medium or low) inherent in each key process for the bank, as well as how well each risk was being mitigated. It was the first time the bank had been able to visualise the level of risk across the business on a single page. And it could be displayed directly on the wall at board meetings. You could see why senior management were excited – now they had a much better understanding of risk hotspots, themes and trends. It was a huge breakthrough for the CEO and the board.
By defining new global risk processes we gave the bank improved communication and collaboration and, critically, enabled senior management to focus their attention on where it was needed most. Our approach ensured transparency in how the bank reviews and reports its risk and our fresh perspective means significantly improved risk management at the bank, which couldn’t be more important in today’s banking context.
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