As a big football fan, the mantra – from coaches and sports analysts alike – of how the defense protects your house and ultimately wins games has been imprinted upon me.
But in my opinion, within the banking industry, this way of life no longer holds up. Your risk management teams are certainly the heart of your defense – helping you play by the rules of the game and turning things around when you fumble – but if you’re only using them on defense, you’re missing a strategic opportunity to use them offensively, where they can sharpen a powerful edge for your bank in a marketplace that’s never been more competitive.
By adjusting your mindset to recognize that every employee owns a piece of the responsibility for risk management, you empower your people to move nimbly, strategically and decisively when you face a change – whether it’s an external regulatory pressure or an internal opportunity to launch a new product or service. In either case, you navigate through change by building on best operational practices, which, in the end, work to your advantage.
Getting your bank into game-ready position doesn’t happen overnight, of course, and the vision starts with the actions of your senior leaders. They set the tone and establish expectations. But everyone ultimately needs to play a hands-on role. When leaders make risk management a priority and nurture an environment where people can work collaboratively and have transparency into related roles, it leads to continuity across your change management process, thus minimizing your risk.
Every time your team takes the field, you start with no points on the scoreboard. But you’ve scouted the competition and developed a strategy for how to get across the goal line. When it’s time to call the opening play, you – and every member of your team – know precisely what it will take. Countless hours of training have generated muscle memory and athletic IQ, making your actions seamless.
Within your organization, the need for a risk-aware culture that is second nature to your people aligns precisely with the signals coming out of Washington, D.C., that the stakes are getting higher. For one, banking referees such as the Consumer Financial Protection Bureau hinted early at increased regulatory scrutiny, then soon after advised that they were tightening up regulatory standards they had relaxed during the pandemic year to allow banks to quickly respond to customers’ financial hardships.
As a starting point, your risk management framework should incorporate four key elements:
Too often, banks reinvent the wheel every time a change or demand comes along. As we eye increasing regulatory pressure in the year ahead, driving and promoting a robust risk management culture is no longer a “nice to have” within your organization: It’s a “need to have.”
When you reset the role and ownership of your risk management as a strategic pillar in your future growth and direction, you’ll find that adhering to best operational practices – on everything from regulatory compliance to product and service adjustments – minimizes risk and actually propels your company forward.
When you make risk management part of your enterprise culture, you’re essentially playing both ends of the field. Of course, playing conditions continue to evolve, so your framework should be flexible to adapt as well. Download my recent white paper to find out how you can turn risk management into a competitive advantage for your bank.
We’re less than 48 hours into Russia’s invasion of the Ukraine, and my household has been glued to the TV, watching the nightmare unfold. During this time, economic sanctions have been enacted, putting intense pressure on the financial system to be able to comply with these new rules. While federally-imposed economic sanctions aren’t new, many banks are scrambling to tighten up AML/KYC routines, at individual, entity, and regional levels.
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In today’s hypercompetitive environment, every bank needs strong guardrails aimed at keeping every process well managed – and operating within the organization’s risk tolerance. At the same time, a never-slowing pace of change creates challenges on everything from internal pressures for fresh customer products to external demands from the latest banking regulations.
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