New report from EY and the Institute of International Finance (IIF) reveals the biggest concerns of the banking industry's chief risk officers
While there may be many headwinds for the global banking industry in 2023, one thing dominates concern among its chief risk officers (CROs).
A 30-country survey of CROs by EY and the Institute of International Finance (IIF) reveals that cybersecurity is the biggest near-term risk for banks around the world.
The number of CROs citing cyber-attacks as the top geopolitical risk jumped from 39% last year to 62% this year and overall 72% of respondents cited cyber-attack as their top concern, putting it back at the top of their concerns for the next 12 months ahead of credit risk which was the top concern last year.
Cyber-threat risks are exacerbated by the revelation that 58% of CROs said their firm’s inability to manage cybersecurity risks is their top strategic risk over the next three years.
Meanwhile, on last year’s top emerging risk, climate risk, around half of CROs said they only had a preliminary understanding of their exposure to climate risk, and just 37% think environmental risk is one of the top five issues demanding their attention over the next three years.
Poll respondents in North America are more concerned than their global peers about cyber warfare between nation states.
Seven in ten North American CROs cited this compared to less than half in Europe, while China’s changing global role dominates among CROs in the Asia-Pacific region.
Cyber attack was cited as the biggest threat to the Canadian financial system in a report from OSFI last year.
Other findings
Among the poll’s other notable findings:
- Given the recent implosion of large crypto exchanges, CROs are operating a more conservative model on digital assets. Nearly half (49%) of banks surveyed said they are still defining their digital asset strategies.
- CROs are also very concerned about talent and culture risks, with 57% of them noting that talent is one of the most significant long-term risks facing the banking industry.
- In order to attract and retain the talent to build a high performing risk management function and meet the changing needs of the risk management function, the vast majority of CROs (94%) say they need some or many new skills and resources.
