Accenture 2017 Global Risk Study: Banking Summary

2017 GLOBAL RISK MANAGEMENT STUDY
Copyright © 2017 Accenture. All rights reserved. 2
IN ADDITION TO THE SURVEY WE CONDUCTED QUALITATIVE INTERVIEWS
BANKING
INSURANCE
CAPITAL MARKETS
The Accenture 2017 Global Risk Management Study is the fifth edition of our study
first published in 2009.
CFOs, CROs, CEOs, CCOs, CDOs
who are involved in their
organization’s risk decisions
COMPANY SIZE
50% with global revenues or income
between US $1bn & 5bn, 50% with
revenues over US $5bn
SURVEYED 475
each from Europe, North America,
Americas and Asia-Pacific.
This includes key markets such as the
Canada, US, Germany, France, Italy,
Spain, UK, Australia and Japan to
enable analysis at country level
100 TO 200 RESPONSES FOCUSED ON THREE
INDUSTRY SECTORS:
Accenture 2017 Global Risk Management Study: Banking Report.

EVOLUTION OF RISK MANAGEMENT
IN FINANCIAL SERVICES
TECHNOLOGY
TALENT
INTEGRATION
The risk function has evolved—from crisis management in 2009 to today’s more integrated, fluid and maturing
discipline. We’ve witnessed technology’s growing influence, the changing profile of the risk professional and the
integration of risk management across the organization. Despite progress, barriers persist.
2009
BEGINNING
MATURITY
CRISIS
MANAGEMENT
THE RISE
OF DIGITAL
COLLABORATION
PARTNER
DISCIPLINED,
INTEGRATED
2011 2013 2015 2017
Technology as
newest strategic
priority
Systems integration
still a barrier
Building analytical
capabilities
The power
of automation
to come
Risk resource
in short supply
Rising headcount Lack of specialized
technology skills
Demand for
data specialists
Technology not fit
for purpose
Shortage in
emerging technology
capabilities
Risk silos Towards a new
risk culture
Direct line to the
Chief Executive
Officer (CEO)
Chief Risk Officer
(CRO) at
executive table
Still closing the
risk-finance gap
For more details on the evolution of risk management, view our interactive timeline.

BANKING RISK
OUR 2017 FINDINGS
4
Change is the only thing that is guaranteed for risk professionals in banking. There are new competitors and new risks
to manage, particularly non-financial risks and emerging risks. The risk function is expected to drive efficiency and
make considered investment choices in people, technology and partnerships.
What risk challenges
do banks face in 2017?*
* Respondents were asked: “To what extent do the following challenges impede the overall effectiveness of your risk management function?”
Data shows aggregated proportions selecting “to a great extent” and “to some extent.”
REGULATORY CHALLENGE
Increasing demand from multiple
regulators in multiple jurisdictions
TALENT CHALLENGE
Shortage of skills in new and
emerging technologies
Shortage of core risk management
talent and skills
TECHNOLOGY CHALLENGE
Increased velocity, variety and
volume of data
Legacy technologies within the risk
function
INTEGRATION CHALLENGE
Lack of integration with other business
functions, e.g. front office, operations, finance
78%
OVERALL
73%
73%
72%
72%
67%
80%
RETAIL
81%
73%
69%
73%
71%
76%
COMMERCIAL
64%
72%
75%
70%
62%
Changing Relationship with the Regulator:
More open and collaborative
Banks should put in place a more proactive way of engaging
with regulators. But there is some way to go before banks are
ready for this.
Banks should put in place a more
proactive way of engaging with
regulators. But there is some way to
go before banks are ready for this.
59%
Copyright © 2017 Accenture. All rights reserved.Accenture 2017 Global Risk Management Study: Banking Report.

THE PATH FOR RISK MANAGEMENT
Banks are responding to the forces of change by taking a more fluid, progressive approach to
risk management. Our research finds companies investing to strengthen their risk functions
across three key areas:
1. HARNESSING
SMART
TECHNOLOGY
2. RISING TO MEET
COORDINATION
CHALLENGES
3. BUILDING
NEW LAYERS
OF TALENT
New technologies can
lower costs, but also
boost accuracy and
agility, bringing better
insights
A common data platform
provides one single
version of the truth
Financial firms are
investing significantly
in risk capabilities
and headcount

1. HARNESSING SMART TECHNOLOGY
Innovation is everywhere in banking. Banking risk leaders are looking to use technology like artificial intelligence
(AI), big data and cloud to make incremental and transformational changes. But at this stage, few risk teams have
fully exploited these technologies.
How advanced is your institution’s use of the following technologies?*
* Respondents were asked “Thinking about the range of technologies that you use to support your risk management function,
how advanced is your institution’s use of the following technologies?” (Base: 159 – banking)
We are highly proficient
in using this technology
Starting to use to
some extent
Not using it and do not
see the potential
We use the technology for
risk function but we’re not
extracting full potential
Not using it but see
the potential
Cloud
Big data and analytics
Collaboration and
workflow tools
Machine learning
Artificial intelligence
Robotic process
automation
18% 38% 26%
16% 36% 30%
16% 30% 37%
12% 26% 33%
10% 31% 35%
8% 25% 38%
11%
15%
14%
23%
17%
20%
7%
9%
6%
6%

1. HARNESSING
SMART TECHNOLOGY
INTELLIGENT RISK MACHINES
Banking respondents believe Robotic process automation (RPA), AI and
machine learning are areas of huge potential.
GREATEST PERCEIVED
OPPORTUNITY FOR RPA IS TO
IMPROVE CUSTOMER SERVICE
Banking respondents in our study
selected “improved customer service”
as the greatest opportunity for the risk
function arising from adopting RPA.
LIST OF RPA AND AI
APPLICATIONS IS EXPANDING
RAPIDLY
• Reviewing disclosures
• Scanning transactions
• Assessing incident reports
• Picking up employee activity anomalies
• Predicting risk exposures changes
• Rapidly checking data quality
OTHER GAINS FROM RPA
Many 2017 respondents (close to a third
in each case) also believe the technology
can help them gain:
• “Improved risk analysis and risk insight”
• “Greater efficiency/productivity”
• “Improved compliance”

POWER OF DATA
In 2017, considerable progress has been made in data analytics. 64% of respondents report risk
analytics is integrated with strategic planning and decision-making and 65% say risk analytics is fully
integrated into the risk function’s everyday operations. However banks are still facing challenges.
Process is often
manually intensive and
not supported by a
common source that can
collect all risk types
72% of respondents say this
challenge impedes effectiveness
of organizations’ risk management
Serious challenge:
increased velocity,
variety and volume of data
72% say these old systems impede
the effectiveness of the risk function
67% report the same from a lack
of integration across existing
technology infrastructure
Legacy technologies
are an equally significant—
and fundamentally
related—challenge
Many firms have much to do in the
basics of data warehousing—integrating
sources, cleaning and transforming
data—to support the use of more
sophisticated analytics techniques

FAST MOVING CLOUD
The use of cloud technology is becoming widespread. However, few have fully migrated their core systems to the
cloud. But cloud remains crucial for cost control and is one of the top choices for addressing cost pressures.
What technologies enable your risk function to address cost pressures?*
* Respondents were asked “To what extent are the following technologies enabling your
risk function to address the cost pressures that you are facing?” (Base: 159 – banking)
To a great extent Hardly at allTo some extent Not at all
Big data
and analytics
Cloud
Collaboration and
workflow tools
(e.g. IBM®OpenPages®)
Artificial
intelligence
Machine learning
Robotic process
automation
35% 47% 14%
33% 38% 23%
21% 50% 23%
18% 51% 25%
17% 52% 23%
13% 44% 26%
6%
6%
8%
17%
6%
82%
are using cloud in some
form, but…
26%
are only just introducing it
Just 18%
report being highly
proficient in using cloud
38%
not using it to full potential

2. RISING TO MEET COORDINATION CHALLENGES
Operating across multiple jurisdictions, regional differences of risk teams spread across locations and specialized
risk types can create additional silo problems for risk functions.
55%
of banking respondents
say that local markets
struggle to balance the
management of risk at
the local level with
organization-wide
risk priorities
52%
say there is duplication
of effort in risk
management across
lines of business
50%
say there is limited
coordination between
risk management
activities at the local
level and the group level
45%
say that organization-
wide risk processes do
not capture the nuances
of local markets

How well are risk functions integrated with other parts of the business? Overall, where it is possible, there is a
trend towards greater centralization of risk management at group level.
25%
of respondents have
centralized coordination of
risk management activities
39%
of respondents expect to be
further centralized
23%
of respondents have
centralized coordination
48%
of respondents expect to be
further centralized
COORDINATION
ACROSS RISK TYPE
(e.g. market risk, credit
risk, liquidity risk)
COORDINATION
ACROSS SPECIFIC
LINES OF BUSINESS
(e.g. life insurance and
property and casualty
insurance)
In 2017… In two years’ time…

Percentage of respondents that said finance
and risk leaders have a close working relationship
that includes joint input into corporate strategy
and enterprise risk management steering
7%
2015 2017 In 2 years’
time
16%
30%
Another key coordination challenge is around the integration of risk with other business functions. This is
something that has not improved over the years of this study. One of the key areas where integration is needed is
between finance and risk.
Percentage of respondents that said a
lack of integration with other business
functions was a challenge that impeded
the effectiveness of the risk function
2013 2017
59% 67%

3. BUILDING NEW LAYERS OF TALENT
Beyond quantitative skills, the risk management function is expected to bring value to the company by providing
economic insights, generating new ideas and building strong relationships. Smart technologies and new
processes call for new skills and risk managers are prioritizing the capabilities they plan to strengthen.
A great deal has been achieved in understanding
emerging technology risks including cyber
78% of banking respondents say their
risk management workforce
capabilities are effective or very
effective at understanding
emerging technology risks
48%Data management
Understanding of emerging
technology risks, e.g. cyber
Understanding of key trends in our sector
(e.g. shift to digital business models)
Advanced mathematical and statistical
knowledge (e.g. enhancing quantitative
capabilities actuaries and data scientists)
Managing reputational risk
associated with social media
Broader commercial awareness
43%
35%
35%
30%
27%
Priority risk management capabilities to strengthen*
* Respondents were asked: “What are the priority risk management capabilities
your institution plans to strengthen over the next year?” (Base: 159 – banking)

3. BUILDING NEW LAYERS OF TALENT
Percentage of respondents to Accenture Global Risk
Management Study indicating that a shortage of
talent is impeding the overall effectiveness of the
organization’s risk management function
Banks have clearly been building their cyber risk capabilities, but there is still a shortage of talent
in this and other specialist areas. In fact, over the past few years the demand for relevant risk skills
has intensified.
51%
2013 2015 2017
73% 73%

SIX SIMPLE BUT POWERFUL
ACTIONS TO TAKE
CROs should strive to meet demanding quantitative and qualitative standards and consider their internal
and external stakeholders while keeping costs under control. They should do this while adapting to
continual regulatory change and rapid disruption from unprecedented technological innovation, emerging
risks and geopolitical instability.
RPA, AI and a wide range of data-driven
technologies can help speed up operations
and improve measurement, modeling,
analysis, integration, predictions and
anomaly detection
DRIVE THE BUSINESS
TOWARD DIGITAL &
TECHNOLOGICAL INNOVATION
Banks need to keep investing in risk data
aggregation and reporting systems with the
flexibility to integrate multiple data sources
and strong data governance features
DATA MANAGEMENT
JOURNEY CONTINUES
START
“SKILLS BLENDING”
The risk management function needs
people with quantitative and analytical
skills, but also creativity, technology
acumen and industry knowledge.
This blend will support more alternative
and innovative solutions
EMBRACE BUSINESS
AND INDUSTRY
TRANSFORMATION
The risk function should strive to be
more commercially aware than ever
in order to evolve its role to support
the business
PUSH FOR TOP-LEVEL
INTEGRATION
Risk management is already becoming
more integrated with operations, IT and
other parts of the business. But greater
integration is often needed with the CEO
and board over strategic decision-making
ESTABLISH A
PROACTIVE RELATIONSHIP
WITH REGULATORS
Banks and regulators now see
themselves as part of an ecosystem that
helps to protect the financial system.
Each party plays a role and has to work
with the other in order provide the
appropriate safeguards

DOWNLOAD OUR
BANKING REPORT NOW
Today more than ever, modern banks need
a risk function that goes far beyond
compliance to become an integrated, strategic
cog in the primary gears of the business.
Or contact:
Philippe Guyonnet: philippe.guyonnet@accenture.com
Fred Kim: frederick.kim@accenture.com
Hamdi Mohammed: hamdi.mohammed@accenture.com
To learn more, visit www.accenture.com/RiskStudyBanking
RISK FUNCTION’S
FUTURE SUCCESS

Accenture 2017 Global Risk Study: Banking Summary

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