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  • Welcome to RiskbOWl – the first closed community of Risk professionals to share ideas, best practices and get a sense of peer practice, with the ability to anonymously ask questions, share perspectives, run targeted polls, and discuss recent regulatory developments. Find out the latest developments in the RiskbOWl community, including user guidelines, community rules, and latest functionality

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    Welcome to RiskbOWl – the first closed community of Risk professionals to share ideas and best practices

    Through RiskbOWl, you will be able to anonymously ask questions, share perspectives, run targeted polls, discuss recent regulatory developments and so much more.

    We are already live with the pilot, and can’t wait for you to contribute as well. But before you do, two things:

    1. Security
    The only way this community will work is if we keep the environment highly secure and therefore we have integrated the login with our Oliver Wyman Single-Sign-On infrastructure that we use for all client work where the information being shared is sensitive.

    By now you should have received an e-mail from our IT services on how to set up your User ID on the OW Digital workbench. These are your RiskbOWl User ID and password.

    For any questions regarding your account set up please e-mail: riskbowl@oliverwyman.com

    2. Community rules
    Remember to maintain anonymity at all times and :

    i. Limit your discussion to details of methodologies (e.g. formulae or equivalent), including the relative merits of different methodologies for capital adequacy best practice.

    ii. Never disclose or otherwise discuss actual input or output values used by them in respect of any methodologies.

    iii. Never engage in discussion of information that relates to your institution or other’s commercial positioning or strategy.

    iv. Adhere strictly to the letter and spirit of competition and antitrust laws - RiskbOWl is a space for knowledge exchange, not collusion.

    We will be pre-screening all messages to start with, but depend on our community to be the first line of defense

    And lastly, remember this is a pilot: we are still fixing some bits and bobs, so bear with us with any hiccups while we make RiskbOWl the best it can be!

    Thank you for being part of this community. We think and hope it will transform how we share knowledge in the risk world in a timely fashion.

    The RiskbOWl team

  • Discover our latest thinking across hot topics in risk management, drawn from serving the world's leading financial institutions and deep, industry-renowned expertise across risk and finance topics, including surveys, primers and points-of-view

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    Conversations with our clients reveal the imperative of realizing the benefits from the promise of digitally transforming credit decisioning and lending journeys, driven by the need to control bank costs and retain customer loyalty in the face of competition from more nimble, digitally-native banks

    To better understand current trajectories in the lending transformation space, Oliver Wyman conducted a survey of banks across several markets, looking at the overarching burning platform, budgets, barriers to transformation, data, analytics, underlying technology, customer management, and organisational setup. In summary, our high-level, selected findings indicate

    Lending transformation is a high priority topic, with participants sequencing Retail and SME first in their lending transformation programs Respondents see the traditional incumbent breakthrough as the biggest competitive threat over the new fintech challenger looming on the horizon Decisioning time, revenue growth and cost reduction cited as top 3 benefits, whilst expected uplift is highest for customer experience Budget for lending allocation is approached on program level or on individual level, with very few respondents approaching it as a strategic objective Most budget is spent on customer journeys, internal workflows and underlying IT infrastructure rather than analytics capabilities

    Lending transformation survey infographic.png

    Reach out for more insight, but we’d be keen to hear from the RiskbOWl community how this stacks up against your lending transformation program – post your thoughts below !

  • Use this space for questions or broader topics pertaining to risk management, from the latest industry trends and regulatory developments, to the latest news and risk headlines potentially impacting the sector

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    Greg Wiltshire is a Director in Oliver Wyman's Risk Delivery Team. Greg brings over 15 years of risk modelling and analytics experience, specialising in risk and technology transformations.

    Matias Coggiola is a Manager at Oliver Wyman and specialises in Credit Risk modelling methodology and regulatory compliance. He curates the monthly Risky Business series.

  • The dedicated space to converse with peers and our experts on all aspects of credit risk, from the technicalities of modelling using internal approaches, credit decisioning and underwriting, credit risk appetite, governance and monitoring, provisioning, and regulatory requirements

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    In recent years, UK banks have increasingly found themselves allocating a significant portion of their risk budgets to Internal Ratings-Based (IRB) remediation programmes. This trend underscores a pervasive underestimation of the challenges involved in building and operating effective IRB models. As we look ahead, it is clear that a more effective approach is not only possible but essential for navigating the upcoming waves of regulatory scrutiny and operational demands

    Our experience - as well as regulatory feedback - shows that robust governance and senior ownership is important, reflected in committee membership and a culture of review and challenge of key judgments

    One critical issue is the composition of the teams tasked with model development. While these teams often possess substantial IRB expertise, they frequently lack robust coding skills. Although banks have established enablement and engineering teams to bridge this gap, the collaboration between these groups is often not fully functional. As a result, much of the code remains monolithic and SAS-based, which complicates quick implementation and increases the likelihood of errors. This disconnect highlights the need for a more integrated approach that combines modelling acumen with technical proficiency to enhance the efficiency and accuracy of IRB model development

    To address these pain points effectively, we recommend three key strategies. First, creating mixed teams of modellers and experienced coders can significantly enhance the development process. By integrating technical expertise with modelling knowledge, banks can improve workflow efficiencies. This collaborative approach not only streamlines the development timeline but also ensures that the initial code is closer to a deployable state. We have also found firms benefit from code sharing through platforms like GitHub, and establishing rigorous code review processes. Code libraries and ‘scaffolding’ (re-usable code structures) also make model development more controlled, repeatable and efficient.

    Second, when using external support, implementing risk-sharing arrangements for delivery can lead to more successful and cost-effective outcomes. By fixing delivery costs while also aligning incentives for successful model results, banks can attract the right level of seniority and mix of resources necessary for effective model development. This shift in focus can help mitigate the risks associated with failed deliveries, ultimately leading to better resource allocation

    Lastly, fostering greater involvement of internal stakeholders throughout the model development phase is crucial. By explicitly engaging these stakeholders and focusing on their understanding of risk management practices and the operational environment, banks can ensure that modelled approaches are more closely aligned with business needs. Additionally, enhancing the education of business units about IRB processes can facilitate stronger collaboration and reduce tensions between modelling teams and business units, ultimately improving the overall effectiveness of IRB models

    In conclusion, while the journey towards effective IRB remediation is challenging, there is a clear path forward. By addressing the pain points head-on and adopting a more integrated and collaborative approach, UK banks can not only ease the current IRB pain but also develop sustainable modelling capabilities going forward. If you would like to get more information on how we organise our teams in our risk-sharing agreements on IRB delivery, feel free to reach out

    This post was authored by Cem Dedeaga, a partner in our Finance and Risk Practice, based in the London office, specialising in prudential credit risk topics. With extensive experience across a diverse range of financial institutions, Cem leads large-scale prudential credit analytics delivery (IRB, IFRS 9) in the UK and Europe. His expertise encompasses the delivery of comprehensive credit risk models and frameworks, helping banks improve compliance with regulatory standards

  • Recent years has seen the Treasury shoot up the agenda given the length of time the sector had operated in much more benign interest rate conditions. Sector turmoil in 2023 prompted supervisors and banks alike to ensure their ALM, liquidity, and interest rate risk capabilities were adequate for new rate realities. Discover the latest in our dedicated Treasury channel

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    After a decade of negative or zero interest rates, European economies entered a rising rate cycle in 2022. Now, as markets anticipate the beginning of an easing cycle, deposit betas are expected to catch up. The question is, are banks prepared to compete for deposits in this environment, which is unfamiliar to a whole generation of bankers?

    In 2024, a systematic approach to deposit management is not only a critical value driver but also a necessary defensive tool. By leveraging smart deposit management techniques, anchored on advanced analytics and operational capabilities, banks can optimise their deposit costs significantly.

    What actions have you taken? Where can the community help you?

  • The channel for all areas pertaining to the ability of institutions to deliver critical operations through disruption, comprising of prudential risk frameworks, internal governance, outsourcing, business continuity and crisis response. Recent years has seen much more scrutiny on the reliance of institutions on technology and third parties, with the former very much on the supervisory agenda, perhaps most explicitly embodied with the advent of the Digital Operational Resilience Act (DORA) in Europe

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  • With an increasingly complex and interlinked risk landscape, comes an equally complex, corresponding regulatory framework, and it's no surprise how high up regulatory compliance now features on the bank agenda. Check in with your peers on the issues driving this key risk management capability, including compliance operating model, regulatory horizon scanning, and financial crime compliance

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    I would also like to learn more about this

  • Channel dedicated to discussion on the supervisory and societal expectations driving banks to meet their sustainability goals, by embedding ESG criteria into enterprise risk management frameworks to address climate-related and social risks, as well as financial institution's climate risk stress testing capabilities, and disclosure requirements

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    @OP

    In my experience, it typically depends on the bank's approach to the override:

    Pre-calibration would typically be included if they are trying to include is as an statistical predictor of risk: i.e. you have some historical information that help you calibrate the specific weight and you only include the override if it increases the predictive ability of the model

    Post-calibration if they want it to be a “penalization” mechanism for management (however this will not be fully compliant with EBA calibration guidelines for the use of overrides in IRB models)

  • From supervisory exercises, to internal scenario-planning, crisis simulation and war gaming, stress testing has become an established, post-GFC, risk management tool that institutions are expected to have in place in order to demonstrate the sustainability of their business model and ensure ongoing confidence in the bank. Discover the latest on stress testing in our dedicated channel

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    In the context of the 2025 EBA Stress Testing exercise we’ve convened our sixth EBA Stress Test industry roundtable, involving representatives from 25 of the largest European banking institutions across ten countries.

    While each bank is looking to approach the stress testing exercise from its own unique perspective, we’ve found that two common trends seemed to emerge:

    Banks expect the anticipated depletion of the Common Equity Tier 1 (CET1) ratio under adverse scenarios to align closely with the outcomes seen in 2023.

    Banks see the operational complexity of the exercise as their main challenge. Participants were concerned about potential CRR3 re-statements (particularly the difficulty in accurately projecting a CRR3 Fully Loaded framework that incorporates all CRR3 phase-ins expected by 2032) as well as the need for top-down calculations to estimate CRR3 compliant RWAs, which could complicate reconciliation efforts and impact result accuracy.

    Other concerns raised by participants included the new timeline and significant changes to Quality Assurance processes - especially regarding potential on-site visits and inspections by the European Central Bank (ECB) - and the unpredictability of the new Net Interest Income (NII) platform and Quality Assurance machinery, which banks believe leaves them with less control over projections and adds to the uncertainty of the exercise.

    Overall, it was insightful to see how given the inherent complexity of the exercise participants agreed on the need for thorough upfront preparation and a robust end-to-end stress testing infrastructure as conditions to success. What are the main concerns at your organisation? How do you feel your competitors will react to EBA’s requirements for this year’s stress testing?

    Graphics: How Oliver Wyman supports Financial Institutions carry out stress testing:
    cc0303ff-d517-49f9-b22c-e6d2071f1964-image.png

  • Whilst dedicated risk management for the development, monitoring and validation of risk models has been long established, the advances in technology, analytics and data driving the banking industry has promoted such model risk frameworks to be updated and enhanced accordingly. Discover the latest impacting your peers across the model lifecycle - model definition, model vs non-model scope, validation, monitoring, periodic review, model risk reporting and governance

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    There is certainly precedent for this in loss forecasting, given various companies that need to follow both IFRS9 and CECL at different legal entity levels, and/or to follow different stress testing guidance for different regulators.   I can’t think of a case where I’ve seen it for the primary credit risk rating models however (at least not for literally the same exposures receiving two different ratings)

  • Organisational culture has long been recognized as a key component of risk-taking and risk-adverse behaviours, making it an important dimension underpinning the overall effectiveness of risk management more broadly within an organisation. Use this dedicated space for more discussion on methodologies, values, and behaviours within an organization that shape its approach to risk management and overall awareness and understanding of risk

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    Hi RisbOWl community.

    I have been thinking lately about the dynamics of the working relationship with 2nd and 3 LOD from a 1LoD perspective.

    While there is much talk about these dynamics from a high-level, ERM or governance perspective, those of us who are in involved more on the day to day interactions need to make sure we 'walk the talk'.

    While clear, continued communication is key, I have found the use of shared resources (such as evidence repositories, plans, collaborative query logs, etc) have really made a difference in the relationship we have built with our validators in the second line of defence.

    What does the community think about common techniques for increasing cross-line of defence productivity.

    Thank you in advance.

  • With as much change in the risk landscape and operating environment, discover insights and discussion on how developments in data and analytics are impacting risk functions, including deployment of AI, regulatory pressures such as BCBS239

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    Very good questions. I’ve come across this as well on operational resilience and
    cyber, where the challenges are similar

    Some thoughts on this (also with the ex-regulator hat on):

    Management bodies should acknowledge the challenge and be thoughtful around
    how to address this, e.g. through training; reporting; succession planning
    etc. We recently heard from a regulator that they were worried that sometimes
    these topics are ‘outsourced’ to one person on the exec/ Board who
    understands it, whereas they are looking for broader skills and knowledge in
    the group. Again I think this is important to acknowledge, including the fact
    that building those muscles take time In terms of ‘evidencing’ appropriate oversight and challenge by the Board,
    when supervisors look at meeting minutes they would expect to see critical
    questions being asked and a level of discussion (rather than the Board just
    ‘noting’ things) The quality of the materials and reports being presented to the Board is very
    important, both data, but also someone bringing out the ‘so what’ and in
    particular where there are areas of judgement and uncertainty, and where
    there are trade-offs
  • Our dedicated channel to discussing the implications of the EU's Financial Data Access (FIDA) Regulation, a key legislative proposal for the EU's implementation of open finance, enabling consumers and SMEs the right to authorise third parties to access their data held by financial institutions. FIDA builds open the EU's longstanding effort to enhance consumer protection and competition in electronic payments, and empower consumers to share their data in a securely, such it that allows access to a broader range of better and cheaper financial services

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  • Got a question? Ask away!

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