What’s Top of Mind for Bank CROs?

For bank chief risk officers, it often feels as though change is the only constant and uncertainty lurks around every corner. From geopolitical tensions to cybersecurity threats and the rapidly evolving landscape of artificial intelligence (AI), staying ahead of the curve is imperative. At a panel discussion hosted by RMA’s New York Chapter, CROs from leading financial institutions shared their perspectives on the pressing issues dominating their agendas. 

Geopolitical Risk: The global stage is rife with uncertainty, with wars in Ukraine and the Middle East, along with tensions over Taiwan. Elections in 70 countries this year add to the geopolitical complexities, as voters have the power to turn several countries more nationalistic and protectionist. “That could well affect the global economy,” Jonathan Hummel, CRO for the Americas at Deutsche Bank, said.

• Stress testing was mentioned as a crucial tool for assessing the impact of global events on portfolios and economies. 

Cyber Risk: Cyberattacks loom large and can lead to potentially massive financial and reputational fallout. According to Brian Gunn, CRO for the Americas at MUFG, while “it’s difficult to model out financially what could happen” in such an event, “confidence could be lost” in an institution.

• A strong risk culture, coupled with employee accountability and continuous training, is vital for effective cybersecurity, panelists said. “Culture comes from the top,” said Massimo Cutuli, CRO at Optiver U.S. “Firms that don’t have it tend to struggle.”  

Artificial Intelligence: AI adoption presents both opportunities and risks, requiring robust governance to manage its complexities effectively. Leveraging AI can aid risk managers in navigating an expanding risk universe amid budget constraints—but caution is advised. 

• Hummel said banks may worry they “will be left behind other banks” if they don’t move quickly on AI, but “we have to make sure we have the right governance in place to properly identify and manage the risks associated with this technology.” 

Regulation: Higher capital requirements in the aftermath of the regional bank crisis could strain competitiveness and drive business to nonbanks. Interest rate pressures persist, impacting margins and consumer spending, with credit risk looming large. 

• “There are a lot of potential economic headwinds that could impact the consumer,” Gunn said. 

For more insights, check out the key takeaways from our 2024 CRO Outlook Survey.