From the Editor

Welcome to the fourth edition of Risk Perspectives™, a Moody’s Analytics publication created for risk professionals, with the goal of delivering essential insight into the global financial markets.

More than ever, European and North American banks are putting risk management on top of their agendas. As US Banks prepare for another round of regulatory stress tests, their European peers are busy finalizing the comprehensive assessment initiated by the European Central Bank. The efforts on both sides of the Atlantic have brought to light the still highly fragmented world of risk management – responsibilities are separated in organizational silos, systems and applications are not compatible, and data is scattered across multiple databases.

With this in mind, we dedicated this edition of Risk Perspectives to helping financial institutions achieve truly integrated risk management. This integration is not limited to IT-related or organizational questions. We are taking a step back and approaching the challenge more holistically to capture and discuss all of its relevant aspects. As with the first three editions, we aim to offer a wide range of views on the risk management challenges confronting the financial services industry, as well as the established and emerging best practices to help firms overcome these issues and improve their businesses as a result.

In the section Rethinking Risk Management, we discuss how banks can integrate their risk management framework, and benefit from synthesizing all the elements of risk from data, infrastructure, processes, and people. Nicolas Kunghehian examines the concepts of enterprise and integrated risk management.

In Regulatory Spotlight, we look at how integrated risk management will impact financial institutions’ preparation for regulations. In the article, “Integrating Resolution Planning into Risk Management Architecture and Change Programs,” Cayetano Gea-Carrasco discusses the importance of effective resolution planning.

The Approaches to Implementation section details how to navigate the complexity that still hinders the integration of risk management and pinpoints key opportunities. One opportunity does not even require massive investment – people. Training staff and leveraging and enhancing their skills are some of the best ways to integrate risk management, make it more efficient, and establish a new risk culture. Sarah Tennyson has contributed a great article on this topic.

Finally, in the section Principles and Practices, we describe effective practices for applying integrated risk management to an organization, including approaches to overcoming common challenges. We leverage our experience from working with clients around the world to demonstrate how to achieve this integration. As an example, Yuji Mizuno shares his experience from the Japanese market.

Risk Perspectives offers actionable information to assist risk professionals in their day-to-day efforts to comply with new regulatory guidelines, master data management and infrastructure questions, and create value for their organizations through better and more effective risk management.

Once again, we hope our perspectives on building more integrated and leaner risk management will help you approach and thrive in a world of ongoing regulatory, business, and industry demands. I encourage you to take part in this discussion and help us shape the future issues of Risk Perspectives by sharing your feedback and comments on the articles presented in this issue.

Dr. Christian Thun
Senior Director, Strategic Business Development