What is risk transformation?
Risk transformation processes expand upon the traditional view of risk management within a financial institution. Taking a more holistic view, risk transformation implements risk management capabilities together with regulatory and business objectives. It views risk management as a strategic asset to be embedded across a firm, not just a corporate function.
Where have you heard about risk transformation?
After the financial crisis of 2008, financial institutions faced increasing pressure from regulators to strengthen their risk management and levels of available capital. At the same time, shareholders still demand higher returns. Risk transformation implementation aims to meet this dual challenge by improving governance and deploying capital more efficiently.
What you need to know about risk transformation.
Risk transformation uses a framework that helps institutions determine their approach to risk management. It focuses on four organisational elements: strategy, culture and governance, operating and business models and technology, analytics and data. By incorporating these four key elements into the framework, executives are able to address risk and compliance issues within each business and across the wider organisation. Management need not address all four elements; depending on needs only one element may require significant change. This holistic approach determined by the risk transformation framework allows organisations to better address the complexities of risk management and regulatory issues.