General Discussion

Subcategories

• ---

• 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.

  4 Topics

  7 Posts

  U

  Welcome back to Risky Business, in which we take you through some of the headlines impacting the banking industry. Read on to hear how tariff-driven uncertainty prompts warning from regulators and banks alike of persisting volatility, rising RWA and provisions, prompting calls to remain vigilant or tempering risk-taking activities; also reported recently are alleged signs of waning focus on climate risk and ESG, at banks and the Bank of England. Feel free to give us your take on the stories, below the line

  Rising RWAs prompt EBA warning

  The Banker
  The European Banking Authority (EBA) has issued a warning about the significant rise in European banks' risk-weighted assets, which reached €9.8 trillion in 2024, due to escalating geopolitical tensions and cyber threats. The EBA emphasizes that banks in the European Economic Area are highly vulnerable to these geopolitical developments, which can impact not only credit risk but also market, liquidity, and operational risks, including cybersecurity issues. This alert underscores the need for increased vigilance among banks to manage these looming risks effectively

  International trade volatility drives provisions

  S&P
  In the first quarter, European banks experienced an 18% year-over-year increase in loan loss provisions, amounting to €11.48 billion, driven by uncertainties in international trade policies that threaten asset quality. The European Central Bank's Financial Stability Review highlighted concerns over rising nonperforming loans and provisioning costs, particularly affecting banks with significant exposure to extra-EU trade sectors. Notably, Barclays and Lloyds Banking Group saw substantial increases in provisions due to macroeconomic uncertainties and tariff risks, while UniCredit and Groupe BPCE reported the largest quarterly rises in problem loan ratios

  Stagflation warnings from JP Morgan

  City AM
  JPMorgan Chase has issued a warning that the US economy might face a threat more severe than a recession, known as stagflation, characterized by simultaneous high inflation and stagnant economic growth. The bank's CEO, Jamie Dimon, expressed concerns over the potential negative impacts of recent aggressive trade policies, including US tariffs, which could hinder economic growth despite a recent stock market rally. Dimon urged caution, highlighting that global fiscal deficits, remilitarization, and trade restructuring are all contributing to inflationary pressures that could lead to economic instability

  UK banks chastised for lack of risk appetite for green finance

  FT
  A senior executive at the UK's National Wealth Fund has criticized UK banks and money managers for their insufficient risk appetite necessary to drive the low-carbon transition. Ian Brown, head of banking and investments, emphasized that private sector involvement is crucial for achieving Britain's net-zero targets, as relying solely on public funds is impractical. Despite Barclays' efforts in financing climate tech startups, Brown noted that institutional investors remain overly cautious, focusing on established technologies rather than taking construction and technology risks

  Bank of England staff depart after downgrade of climate risk

  FT
  The Bank of England has shifted its focus away from climate and nature risk since Andrew Bailey became governor, leading to concerns that the financial sector may be under prepared for these issues, according to ex-BoE staff. Despite the UK having legally binding targets for net-zero carbon emissions by 2050, the BoE has faced criticism from former staff and think tanks for downgrading climate change in its priorities. There are mixed messages from government officials about prioritizing growth over climate objectives, which has affected the BoE's technical risk-modelling capacity

  Goldman tempers risk-taking in expectation of tariff-fueled uncertainty

  Reuters
  Goldman Sachs has strategically reduced its risk exposure following US President Donald Trump's tariff announcement, preparing for increased uncertainty in financial markets. Despite these measures, Goldman remains active in absorbing client risks while adapting its operations to maintain liquidity and stability. The bank anticipates continued adjustment in areas such as capital spending and mergers, with the US economy showing resilience amid concerns regarding fiscal deficits and interest rate trajectories

• 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

  1 Topics

  1 Posts

  U

  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

  CRO Agenda 2025

  Get in touch to hear our latest thinking