Implementing risk transformation in financial institutions
Governance and culture
Risk transformation can enable a financial institution to elevate risk management from a functional capability to an enterprise responsibility that permeates the entire organization. When that happens, every business, function, and individual becomes responsible for, accountable for, and capable of recognizing and addressing the risks within their purview. Moreover, risk awareness and appropriate risk-related skills can become an integral component of every individual’s responsibilities at every level. In these ways, risk transformation can enhance the organization’s ability to implement business strategies and achieve goals while addressing risks and complying with evolving regulations.
This document is one in a series of four on the cornerstones of risk transformation (see Figure 1):
• Strategy
• Governance and culture
• Business and operating models
• Data, analytics, and technology
As explained in Aligning risk and the pursuit of shareholder value: Risk transformation in financial institutions,1 when these cornerstone frameworks and capabilities are in place, risk management, risk governance, and regulatory compliance can be implemented in a more aligned and integrated manner.
Figure 1: The cornerstones of risk transformation
What vision drives the
Organization?
Business Model
Operating Model
culture
What oversight ensures the strategy is executed? Governance
Strategy
What shared values guide the organization? Data Analytics and Technology
What data, analytics and technology infrastructure enables execution?
1
How should execution be structured?
Aligning risk and the pursuit of shareholder value: Risk transformation in financial institutions, 2013, Deloitte
