Shaping Up Your Risk Management
The recent events impacting the banking sector with the fall out after the troubles at Silicon Valley Bank should lead to financial firms asking if their risk frameworks are really shaping up to the challenge and are fit for purpose. If what we are hearing about SVB in the news is true, then there were certainly a number of problems with their risk management, including:
a culture that either ignored, or had a lack of respect for, the risk function, both at Board and senior business management level.
a lack of expertise, focus and education around the top table in managing the very real risks the organisation faced.
an apparent lack of willingness to take decisive action when alarms were raised.
under investment in the firm’s risk frameworks.
At Shapes First we partner clients across the financial and other regulated sectors to implement frameworks to manage the risks faced by their firms. In undertaking these assignments we encounter firms at very different stages of maturity and readiness, including those that may be experiencing similar challenges to those that were reputedly in place at SVB. Our approach is to work with a firm to implement a robust risk culture and framework, not only to shape up to the regulatory challenges, but also to identify and realise the real business opportunities the firm can achieve from effective risk management.
Corporate cultures where the attitude in the front-line business management supports a view that risk is not a front of house problem are unlikely to achieve the full benefits of effective management of their risk, and leave themselves exposed. Real world events suggest that whilst this attitude may carry while the business climate is good, a storm is never far away.
Risk management is not a job to simply be left to those people in the second line functions with their complex models; risk culture requires effective embedment across all three lines of defence.
We work with our clients to demonstrate how risk frameworks that are implemented well within an organisation using the right processes and tools across the three lines of defence are commercially sensible, can achieve real business benefit, and while it is impossible to predict when a storm might hit, having good risk management processes in place goes a long way to reducing the impact when they do. After all, avoiding going bankrupt is a rather big business opportunity!
If you would like to hear more about how Shapes First works with firms to deliver and embed their risk management frameworks then we would welcome a discussion.