Regulatory demands continue to drive the risk agenda

Top risk priorities

Compliance risk

Risk appetite

Liquidity

Risk culture

57%

47%

32%

28%

28%

Regulatory compliance

Risk appetite

Credit risk

Operational risk

61%

59%

57%

48%

Board CRO

Credit risk

Regulatory capital management 37%

of banks are reporting good progress integrating risk appetite at the firm level, but still having trouble embedding it further down the organization.

Embedding risk appetite remains a challenge

Only 43% of banks report that individual business decisions are “largely tested” against risk appetite

BANK

55%

43%

Largelytested

51%

Somewhattested

6%

Nottested

66% continue to review risk appetite progress on an annual basis

17%

Quarterly

15%

Every six months

2%

Event-driven trigger to review

66%

Annually

Overhauling risk oversightRethinking risk managementey.com/bankingrisk

Overhauling risk oversightRethinking risk managementey.com/bankingrisk

Risk culture remains in a state of transition

Methods to monitor adoption of desired risk culture

Top initiatives to strengthen risk culture

are in the process of changing their culture

75%of banks report cultural change is a work in progress

81%

Internal whistle blowers

Issues raised via internalaudit reports

Scale of breach of risk limits

Reviews of action takenwhen controls are breached

Cultural surveys

50%

Embedding risk appetite

Reinforcing accountability

Enhancing messages and tonefrom the top

Enhancing communication and trainingregarding risk values and expectations

Aligning compensation with risk-adjusted performance metrics

68%

65%

50%

47%

81%

77%

75%

71%

63%

Overhauling risk oversightRethinking risk management

Bank boards and chief risk officers continue to make major changes to the way their institutions monitor, measure and implement risk programs and how they manage non-financial risks.

Addressing non-financial risks more effectively is a significant area of focus for the CRO

of banks take a tailored approach to addressing non-financial risks in their operational risk framework

Market conduct

Fraud or rogue traders

Reputational risk

Systems risk

Compliance risk

Money laundering

Conduct risk

Regulatory risk

60%

48%

48%

Top non-financial risks

67%

74%

67%

67%

64%

Who leads the risk culture change initiative?

74%

The COO(chief operating officer)

The CHRO(chief HR officer)

The CEO(chief executive officer)

Cross-functionalsteering group

The CRO(chief risk officer)

3%3%

24%

43%

27%

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Rethinking risk management: Banks focus on non-financial risks and accountability, EY’s 2015 risk management survey of major financial

institutions, is the sixth annual study of risk management practices conducted in cooperation with the Institute of International Finance (IIF). A total of 51

firms across 29 countries participated in this year’s study.

Help your bank adapt to a new risk management orderVisit ey.com/bankingrisk

Banks are changing their approach to risk management, creating proactive methods to manage non-financial risks

and making front-office staff more accountable.