73% of bank CROs worldwide see cyber security as the top risk for the next 12 months, according to EY and the Institute of International Finance’s (IIF) 13th annual Global Bank Risk Management Survey, which highlights the broad range of threats, for which Chief Risk Officers of financial institutions should prepare.
While many well-known risks remain at the top of CROs’ agendas, threats to banks are constantly changing and taking on new forms. The survey, conducted among a sample of banking CROs from around the world, highlights that the role of the CRO is expanding and evolving. As highlighted, in order to manage current and future risks, they will need more critical thinking skills, more effective data analysis and increased organizational agility.
Cybersecurity in focus
In particular, cyber security continues to dominate the agenda and remains the top risk for bank CROs over the next 12 months, according to 73% of respondents. According to EY, it is a timeless challenge, as the complexity of threats/attacks is constantly evolving and coming from multiple directions.
The spectrum of threats
Ranked as the second most pressing risk for the near term (36% each) are concerns about compliance with regulatory rules and regulatory requirements, as well as operational resilience. Meanwhile, the biggest emerging risks for the next five years include risks related to climate change and natural phenomena (56%), as well as the use of machine learning and artificial intelligence (53%).
Geopolitical trade tensions can lead to increased counterparty credit risk for institutions operating in regions affected by them. Geopolitical developments could also test banks’ operational resilience if they are forced to withdraw from certain markets.
