Future of Risk

The basic prerequisite for any CRO function is excellence in all relevant risk management disciplines as well as a comprehensive understanding of current and future regulatory requirements. Only with the appropriate expertise is it possible to meet the new challenges of the digital and highly competitive banking and insurance world.

Although established risk types continue to be the focus of supervision and harbour high loss potential, it is becoming increasingly important for companies to recognise and manage new risks at an early stage. One prominent example is sustainability risks, for which risk functions must develop rapid, concrete measures for integration into the existing risk management framework. Another new focus is the consistent measurement and management of non-financial risks (e.g. operational, strategic, IT-related risks). All banks and insurers need to take significant action in this area in order to ensure the necessary adjustments are made in a long-term, sustainable and efficient manner - not only against the backdrop of new regulatory requirements, but also due to the impact on the business model.

In order to be able to act as a strategic discussion partner within the company, the governance of the risk function must also be orientated towards the business and the underlying value chains. In many cases, this requires a transformation of the risk organisation. The centralisation of key risk functions, the breaking down of silos and the adjustment of the 3-LoD model are some of the key levers for improvement.

A flexible and scalable IT risk architecture is an essential component of the target image of a future-proof and competitive risk management function. Current technological trends in the areas of automation, standardisation and scalability through the use of cloud solutions, risk software vendors, advanced analytics and machine learning are just some of the opportunities that the risk function must also learn to exploit. For the CRO function, this is not just about utilising technological trends, but also about properly assessing their risks.

Fragmented processes characterised by manual intervention in the risk environment of many banks and insurance companies make it clear that only a few currently have effective and efficient process management. Traditional silo thinking and specialisation reinforce these inefficiencies and prevent change. Hand in hand with a transformed organisational structure and IT architecture, optimising processes can free up capacities that can be used to overcome the new challenges.