Quarterly European Banking Authority (EBA) risk dashboards highlight main vulnerabilities in the EU banking sector and serve as an extremely useful source of benchmarking information. A recently published report1 is of particular interest, as Q4 2022 data is supplemented by latest analysis of the confidence crisis involving Silicon Valley Bank and Credit Suisse. The report notes a sharp increase in financial market volatility in early March; and a somewhat uncertain macroeconomic outlook. Despite the turmoil, it acknowledges that bank’s share prices and credit spreads have recovered, and overall EU/EEA banks remain in strong financial position with sufficient capital and liquidity ratios. This is supported by a heatmap of risk indicator trends overtime containing no ‘RED’ indicators; measures are predominantly GREEN with 3 out of 10 trending AMBER. Continue reading…

Without doubt, environmental, social and governance (ESG) considerations are becoming increasingly important for organisations and their teams, with businesses being judged on their ESG performance. The catch-all acronym, however, which in reality combines three distinct and separate matters under one umbrella, tends to be misused and overused, creating a lexicon of ESG specialists, ESG departments and ESG risks. In fact, the Bank for International Settlement (BIS)’s paper on ‘Deconstructing ESG scores: how to invest with your own criteria’[1] highlights that it is nearly impossible to create a portfolio aligned with all three ESG values. Investors should separate and align their portfolios with either E, S or G factors. Continue reading…

The importance of the risk profession has been increasing even pre-pandemic, and the demand for practitioners is on the rise. To quote Bloomberg, ‘risk management is suddenly a hot job’1, with firms looking to employ more resilience and crisis management experts. The regulatory landscape also influenced the hiring drive, with focus on hot topics such as cyber and third-party risk management. A survey conducted by the Best Practice Operational Risk Forum, comprised of risk professionals from over fifty international financial services firms, noted that risk recruitment in fact accelerated during 2021, with 45% of firms increasing the size of their risk teams. 74% remarked that the composition of the team has changed, with more focus on specialist roles.  Continue reading…

Working from home has become a normality of the new reality. According to Eurofond1, as a result of the pandemic, almost half of the working population in the European Union was working remotely either fully or partially; a significant increase from the 10% of home-workers pre-COVID-19. During WFH, maintaining a sound control environment and exercising prudent risk management is essential. Risk management department plays a crucial role in achieving this objective. According to the 3 Lines Model2, updated and reissued by the Institute of Internal Auditors in 2020, Risk function assists by providing ‘expertise, support, monitoring, and challenge related to the management of risk’. But is WFH, with a somewhat strained informal interactions and communication channels, reducing the effectiveness of the second line function? Continue reading…