The number of risk categories that Asian banks must deal with has skyrocketed from just 9 to 29 in the past two years- with customer data privacy, cloud risks and consent management, growing in importance, according to a ServiceNow-sponsored report by analyst firm IDC.
Asia-Pacific banks were far more likely to pay attention to operational resilience, cybersecurity, and climate risks than their global peers, according to the IDC report. Only two-thirds prioritised credit risk issues in their strategy, compared to the 98% global average who put credit at the top of their concerns.
“Historically, banks have focused on credit risk—but credit modelling won’t solve anywhere near all of your problems today,” says Radish Singh, ASEAN financial services risk management leader at EY. “Your operational risk is potentially your most intangible and least scientific category of risk, including aspects like cybersecurity or governance of digital transformation, and it can blow up extremely rapidly.”
“Banks have become painfully aware of the risks they face in every aspect of their business and that’s prompting some of them to consider if they can turn risk management into a real competitive advantage,” she says.
Chief risk officers are not able to solve the explosion of priorities without taking a hard look at the interdependencies that exist between employees, customers, technology, facilities, partners, processes, and more, according to Matthew Talbot, ServiceNow’s head of financial services, Asia Pacific and Japan.
“The only way financial institutions can compete with the rise in risk and compliance is by aligning their risk operating model with business growth while at the same time linking real-time data across the organisation,” Talbot says.
Talbot’s observations come as Asian banks double down on risk management in a volatile world. Research from IDC shows that 86% of Asia-Pacific banking leaders increased IT spending into cybersecurity and identity/access management, making it the most popular priority for tech budgets by a substantial margin. More broadly, the region’s top banks increased spending on risk from 23% of budget in 2018 to 30% in 2021.