To enhance enterprise risk management (ERM), banks need to transform the function. Here’s what can help.
Banks today face an unprecedented pace of change and high uncertainty, dealing with significant threats ranging from bad employee behaviors to sophisticated cybercrime, trade wars, and climate change.
These trends severely challenge the formulaic approaches to enterprise risk management (ERM) in place at many banks today. Our work supporting leading global banks convinces us that ERM functions must transform themselves, so they can guide their institutions through threats and opportunities while simultaneously meeting the expectations of all stakeholders. Our new paper, Creating the bank enterprise risk management function of the future, discusses the abilities that the ERM function of the future will need, across three dimensions:
Enhancing these abilities requires ERM to take four steps:
Download the full report for more insight (PDF–11MB). This article is extracted from the full report, which was originally published in the Journal of Risk Management in Financial Institutions, 2019, Volume 12, Number 4, pp. 297–310, and is reprinted here by permission.
Hans Helbekkmo and Olivia White are partners in McKinsey’s San Francisco office, and Cindy Levy is a senior partner in the London office.
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