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Established in 2004, Avantage Reply is a pan-European specialised management consultancy delivering change initiatives in Operations, Risk, Finance (Capital Management and Regulatory Reporting), Treasury and Payments. Avantage Reply employs 220 consultants within our 12 offices across Europe. Additional information is available at www.avantagereply.com
Following the 2008 crisis, financial regulation moved from the periphery to the centre of the global economic agenda. Risk discussions were no longer confined to technocratic circles but were taken up by the financial industry as a whole, including policy makers and the general public. We saw the increasing importance of Chief Risk Officers (CROs) and recognised the need for risk management to be embedded across all levels of an organisation. In 2014,
Avantage Reply launched its CRO Insights Journal to respond to these shifts.
The first edition of the CRO Insights Journal focused on the growing role of the Risk Function and how CROs’ responsibilities have evolved in response to the crisis. We are now delighted to present our second edition which captures the nature of risk in an increasingly complex economic landscape.
In 2015 we are seeing the tepid beginnings of a financial recovery. However, with numerous risks persisting and new ones emerging, it is clear that we are not yet out of the woods. This remains the greatest cause for concern. The Financial Times describes risk in our time as a “global challenge that respects no boundaries.”1 Certainly, these risks stem in part from the interconnectedness of our technologically advanced and sometimes volatile world. Further risks have appeared as a result of regulatory and monetary policy reforms implemented in response to the crisis.
In this second edition, Avantage Reply consulted the Heads of Risk from various European banks for Belgium, France, Germany, Italy, Luxembourg, Netherlands, and the UK. We are delighted to include the perspectives of the following pre-eminent professionals:
Together, they bring key insights and best practice solutions from their respective organisations.
The CROs shared their views on five pertinent risks and how they are being addressed. First, the CROs explored the challenges raised by the current low interest rate environment. Secondly, they observed the increasing importance of establishing a positive business culture, with an acute focus on how organisations respond to regulatory challenges and, at the same time, reduce conduct risk. Thirdly, risks raised by recent technological developments, including the threat of cybercrime, were also discussed, as were the potential pitfalls caused by third-party risk through the outsourcing and offshoring process. Finally, the CROs selected a number of emerging issues in risk management, including changes to the regulatory and legal environment, and the continual pressures placed on the Risk Function by ongoing global instability.