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• Risky Business

  Curated by Matias Coggiola, Risky Business is a periodic series featuring a selection of articles written by risk managers on the most talked about topics in the risk community.

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  Welcome back to Risky Business, where we once again take a quick look at the stories and developments hitting the headlines in risk. This month’s developments underscore three strategic fault lines in banking risk management: resilience, competitiveness, and supervisory intensity. Regulators are tightening expectations around too-big-to-fail planning while simultaneously recalibrating capital regimes. Enforcement momentum remains high, with penalties against Barclays, Mastercard’s Vocalink, and structural overhauls at Toronto Dominion and HSBC signalling the cost of compliance missteps. At the same time, supervisors are reshaping the agenda — OSFI urging “smart” risk-taking, the OCC redefining “debanking,” and the Bank of England signalling AI’s role in oversight. For boards, the imperative is clear: adjust risk appetite and compliance investment to a shifting landscape where regulatory tone is evolving but scrutiny remains unforgiving. UBS emergency plan is not “executable,” says Swiss regulator Financial Times, FINMA Finma concluded UBS has made progress since acquiring Credit Suisse, but that its resolvability / emergency (“living will”) plan remains insufficiently integrated into its overall resolution strategy to be fully executable. Signals continued regulatory pressure on large banks to ensure credible recovery & resolution planning. Why it matters Highlights persistent systemic risk: credible recovery and resolution plans are central to preventing taxpayer-funded bailouts. Banks must maintain executable contingency plans to ensure capital and liquidity can absorb shocks without destabilizing the financial system Bundesbank Proposes Simplification of Eurozone Banks' Capital Requirements Reuters Germany’s central bank, the Bundesbank, proposed reforms to simplify the complex capital requirements for eurozone banks. Suggestions include consolidating capital buffers and redefining the use of capital instruments, aiming to enhance financial flexibility and competitiveness without compromising resilience Why it matters Simplifying capital rules can improve flexibility in how banks absorb losses and allocate capital efficiently. Strategically, it enhances competitiveness of Eurozone banks versus US peers while maintaining systemic resilience, particularly during economic stress More on this story here US regulators to re-propose Basel III “Endgame” by early 2026 Reuters The Fed, alongside the FDIC and OCC, plan to re-propose a more “industry-friendly” version of the Basel III Endgame framework. This reflects pushback against earlier drafts which banks saw as too burdensome. Will affect risk-weighted capital, stress testing, disclosure and may shift the compliance burden Why it matters Capital requirements directly determine banks’ ability to absorb losses and support lending. Changes in the framework affect strategic capital allocation, risk-weighted assets, and stress testing, influencing both competitive positioning and resilience under adverse scenarios, further complicated by differing regional implementation timeframes EU banks fear tumbling rates will upset IRRBB balances Risk Magazine European banks warned that declining interest rates are complicating the management of Interest Rate Risk in the Banking Book (IRRBB). Conflicting regulatory tests on earnings and balance sheet value are making hedging strategies more complex, raising concerns about potential impacts on profitability and stability Why it matters Interest rate risk affects both earnings and balance sheet stability. Strategic hedging and robust IRRBB frameworks are essential to protect capital buffers, preserve profitability, and satisfy regulatory scrutiny amid volatile rate environments Barclays fined £42mn for AML control failures Financial Times, Reuters The UK’s FCA fined Barclays £42mn for anti-money-laundering control failures in its wealth unit, particularly around high-risk clients. The case reinforces that financial crime compliance remains one of the costliest and most reputationally damaging risk exposures for large bank Why it matters AML failures can result in significant fines, reputational damage, and operational disruption. Strategically, robust AML frameworks are critical for protecting capital, maintaining market trust, and preventing regulatory enforcement from constraining business growth Mastercard’s Vocalink penalised for weak governance Financial Times The Bank of England fined payments infrastructure provider Vocalink £11.9mn for poor governance and failure to fix control gaps. With payments rails considered critical infrastructure, the sanction highlights regulators’ growing focus on operational resilience beyond traditional banks Why it matters Operational resilience is essential for systemic infrastructure providers; governance failings can create cascading risk exposures. Strategic attention to controls ensures that infrastructure continuity supports the broader financial system and prevents capital erosion from operational incidents US regulators cancel some bank exams amid regulatory rollback Reuters Bank supervisors in Washington have cancelled some scheduled examinations and softened enforcement notices, marking a visible regulatory rollback. The shift raises questions about whether reduced oversight will create blind spots in identifying emerging risks across the banking system Why it matters Reduced supervisory intensity can lower compliance burden but risks undetected emerging threats. Strategically, banks must self-monitor rigorously to ensure capital adequacy, risk coverage, and resilience are not compromised by lighter regulatory oversight Canada's OSFI Encourages "Smart" Risk-Taking Among Large Banks Reuters Canada's Office of the Superintendent of Financial Institutions (OSFI) urged the country's largest banks to diversify away from mortgage concentration and engage in more "smart" risk-taking in business lending. This reflects a shift towards calibrated risk-taking to support economic growth Why it matters Capital allocation and credit risk strategies are being nudged toward supporting broader economic growth. Strategically, this signals a regulatory tolerance for controlled risk-taking, requiring banks to balance risk appetite with capital preservation OCC Issues Guidance on “Debanking” Practices Reuters The OCC issued guidelines urging banks to avoid cutting customers based on political or religious grounds, emphasizing the balance between compliance and equitable access. This move aims to prevent discriminatory practices in banking services Why it matters Compliance with equitable access rules intersects with operational and reputational risk. Strategically, banks must manage client acceptance policies carefully to avoid litigation or enforcement, while maintaining capital and operational efficiency Bank of England Advocates AI in Supervisory Oversight Reuters Bank of England Governor Andrew Bailey highlighted the potential of artificial intelligence in enhancing regulatory oversight, suggesting that AI could help regulators detect misconduct and emerging risks more effectively. This marks a step towards integrating advanced technologies in financial supervision Why it matters Leveraging AI in supervision affects how banks are monitored and how risk exposures are identified. Strategically, institutions need to anticipate increased data-driven oversight to maintain capital adequacy and compliance while optimizing risk management processes
• CRO Agenda

  Distilled to a simple statement of intent, we strive to support our clients manage and mitigate the impacts of ever present volatility and uncertainty, not only in the immediate operating environment, but also, as seems increasingly the case in recent years, uncertainty arising from geopolitical tensions and societal shifts. Check out the latest topics we see CROs and risk leaders should have on their radar

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  As far as understatements go, to say that the in-tray of Chief Risk Officers and risk leaders is quite full would, quite rightly, be seen as big one, having had to contend with the impacts of several, once-in-a generation events, all at once and within the first half of a single decade. Little wonder that terms such as “polycrisis” have been coined that neatly sum up recent years, and the persisting uncertainty is, arguably, leading to take up of another pithy, catch-all term “permacrisis” What’s clear from our conversations with our client CROs and upcoming, future risk leaders via our CRO Incubator program, is that we’re seeing concerns abound from the tumult in the overarching operating environment from seismic shifts in geopolitics, the shifting nature of cyber risk and of the need to strengthen operational resilience, the need to effectively comply with existing and new upcoming regulation, as well as worries on the capabilities needed to evolve the risk function future in a way that delivers on the promise of technology, without fundamentally disrupting the function itself Our CRO Agenda therefore reflects these concerns, the business problems faced by our clients on our project work, and the overarching drivers of the CRO agenda, namely the uncertain outlook, breeding volatility and fragmentation in policy making and regulation Our extensive project work throughout these years and in this moment illustrates the continuing value in engaging Oliver Wyman given our decades-long and industry renowned risk expertise that has helped many of our clients find a path through these uncertain times [image: cro-agenda-2025.png] Get in touch to hear our latest thinking