Strengthening Defences: Evolving Risk Management
As geopolitical tensions and regulatory scrutiny intensify, increased risk management has become an absolute priority.
Banks have continued their focus on stress testing, scenario analysis, and cyber risk preparations.
One executive detailed their proactive measures: “We’ve significantly increased our connectivity internally, externally, and with regulators. Regular stress testing and scenario planning are central to our approach, allowing us to anticipate and mitigate emerging risks proactively.”
Another executive echoed this sentiment, emphasising rigorous monitoring: “We’ve implemented detailed and bespoke risk monitoring processes to closely track client and sector-specific risks. Our systems ensure rapid adaptation to changing risk conditions, keeping us ahead of potential threats.” This proactive approach is widely recognised as critical to ensuring banks remain resilient against emerging geopolitical and financial risks.
Alongside regulatory challenges, non-financial risk is a growing concern. Demonstrating corporate responsibility, even during turbulent periods is still expected.
Beyond the Balance Sheet
While financial risk remains a core focus, several senior banking executives identified non-financial risk as a complex and consequential area. With heightened geopolitical tension, evolving regulatory expectations, and rapid shifts in public sentiment, non-financial risk management is being brought to the forefront.
Executives pointed to the importance of understanding not only direct exposures, but also second- and third-order impacts. One executive remarked on the growing pressures: “It’s not just about capital adequacy. It’s about being able to demonstrate to clients, regulators, and staff that you are managing broader responsibility in a volatile environment.”
Another added that transitioning approaches to non-financial risk - especially around geopolitical impacts and staff sentiment - was now “as important as stress testing balance sheets.” A recurring theme was the recognition that banks must view operational resilience and social responsibility as intertwined, not separate.