R&C: How would you describe the current state of risk analytics and reporting processes at financial institutions (FIs)?

Voigt: Banks overall have made great advances in recent years, but there certainly remains much disparity across the industry. Leading banks are viewing their analytics capabilities as a strategic benefit and not only as a cost centre. They are making investments to centralise their data and are bringing more information to the surface as a result. Others remain hesitant, or unable, to make such investment, and they continue to struggle with manually-intensive processes.

R&C: How has the role of risk reporting changed since the financial crisis?

Voigt: Prior to the last crisis, banks tended to monitor risk in silos. To view risk at the top level, institutions largely relied on aggregated summary data from their operations within each line of business and geographical region. Risk reporting tended to be very dry and backward looking. There was not a lot of insight being drawn from it. Its role was largely to report on something that had already occurred, rather than preventing it from occurring in the first place. The effort and time lag involved in collecting, aggregating and summarising the information really limited its usefulness for anything beyond that. As a result, we saw that many institutions were unprepared to assess and react to the crisis in a timely manner. Since the crisis, there have been great advances in the timeliness, flexibility and granularity of risk reporting. This has allowed for an ever-increasing use of data to support decision making.

Apr-Jun 2018 Issue