Effective business management rests on a robust process of preparing for threats and a strong risk governance framework.
Our analysis of the 20 systemically important banks shows that there is some confidence among these organizations that they have the capabilities and governance to meet the challenges of the future. However this is hard to evaluate independently, due to the fact that a significant number do not formally assess the effectiveness of the Board Risk Committees (BRC) and that an even higher number do not independently review the stress-testing process.
Global regulators have set a very high bar. As the survey highlights, greater automation of data gathering and analysis has become a key area of focus, requiring significant investment by the SIBs in systems capability. However, perhaps the key question should be to what degree of granularity of data and analysis is necessary to achieve the desired regulatory objectives? Or, are the banks taking sufficient action in other areas such as lower risk appetite and risk tolerances, and improved risk management capability to appropriately manage risks.
We see a real determination by Boards and senior management to tackle these challenges. We hope this report will help management teams to validate their plans and assess their own progress against the standards expected by the industry.