Risk management of the future: The road ahead for risk managers

Risk management of the future: The road ahead for risk managers

1. David, can you please tell the Center for Financial Professionals about yourself and your professional background?

I have been in banking for close to 30 years with over 22 years at JPMorgan then another 5, almost 6, years with MUFG Union Bank before coming to Wells Fargo late last year. I have held various roles in Operations, Loan Syndication, Technology, Middle Office, Credit Risk Reporting, Enterprise Risk Management and now in Regulatory Compliance Risk.

2. You will be presenting within the Future of Risk Management Stream, at the 6th Annual Risk Americas Convention with the CRO at Canadian Western Bank. Can you briefly tell the audience how technology and regulatory advances have had impact on risk managers?

As activities increasingly occur on new devices and channels which are beyond the boundaries where traditional control environments operate, these changes will alter the way companies need to think about and govern risks. At the same time as the regulatory environment has become more challenging, regulators are also leveraging technology to spot common issues across the industry and have a much lower tolerance for missteps. Risk managers need to be visionaries the extent that they understand what changes in their industry but others as well which may impact theirs and expect that regulators will be doing the same.

3. How should risk professionals prepare for the evolution of risk management as a function?

Risk management needs to be a partner with the first line during the strategic planning process, walking a fine line between protecting the enterprise and constraining its growth. There should also be a focus on data quality as the old saying, “garbage in, garbage out”, still applies and probably more so today as we become more reliant on the output from various models. If possible, look for opportunities in other risk areas in order to get a more holistic view of the enterprise and its challenges.

4. How should risk managers utilize the opportunities which technology provides to better manage risks?

I think as technology handles the more mundane or “business as usual” risk management activities it will allow risk managers to focus more on emerging risks and trends. The ability to spot possible future issues and their impacts will be invaluable to an organization. Better and faster data aggregation capabilities will assist in highlighting trends or anomalies that might not have been seen or noticed in the past.

5. What factors should be highlighted when discussing the future impact on risk managers?

Soft skills are important to build partnerships across the enterprise and to be seen as a function that while it may not be revenue generating, it can be revenue saving. The ability to articulate the reason why something should or should not be done. The need to have a holistic view of risk across the enterprise, if I’m in Credit Risk then I should be asking myself, does this impact another risk (Market, Operational)? Don’t forget gut instinct, remember that sometimes the best algorithm is based on experience and feelings so don’t exclusively rely on technology, it is just another tool on your belt.