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Speaking the same risk language is an essential part of any successful enterprise risk management (ERM) program. Without a proper risk taxonomy, after all, risk management is nothing but anecdotal...
April 17, 2025 | By Brenda Boultwood and Joshua Switzer
As a former chief risk officer, I remember well that time of year for the formal annual appraisal process. A CRO acquaintance recently called to ask for my advice on feedback he received on his...
February 21, 2025 | By Brenda Boultwood
The distinction between risk and uncertainty will be critical in 2025, which promises to take risk managers out of their comfort zone. New systemic and idiosyncratic risks will arise, impacting...
January 17, 2025 | By Brenda Boultwood
The adage “truth is stranger than fiction” certainly applies to recent geopolitical risk events. Indeed, some real-world happenings have been more surprising and suspenseful than any spy movie.
...
November 25, 2024 | By Brenda Boultwood
Liquidity risk management for risk practitioners remains one of the most difficult areas in asset-liability management, complicated by limited data on how certain types of depositors respond to bank...
September 20, 2024 | By Clifford Rossi
Complicated by cyber hazards and constantly evolving artificial intelligence, managing operational risk has never been more difficult for banks. Facing more regulatory scrutiny, operational risk...
August 9, 2024 | By Clifford Rossi
Over the past 15 years, we’ve learned the common ingredients for bank defaults: fast, unchecked growth, increased operational and product complexity, and heightened risk taking. Combine these factors...
July 19, 2024 | By Clifford Rossi
The top 10 U.S. banks collectively account for more than $12 trillion in assets, reflecting a diversity of products and services. Consequently, these banks are fraught with risk, and careful...
June 21, 2024 | By Clifford Rossi
The three lines of defense (3LoD) doctrine has been one of the major pillars of enterprise risk management at banks and regulators for more than a decade. But has it outlived its usefulness? If so,...
May 24, 2024 | By Clifford Rossi
Why do some banks take on too much risk? While there is no simple answer to this age-old question, human behavior certainly has had a big effect on risk-taking. Indeed, people are influenced by...
April 12, 2024 | By Clifford Rossi
While we often think of concentration risk in the context of managing credit or investment portfolios, it turns out this risk is ubiquitous across a bank’s risk taxonomy. It has over the years been a...
March 15, 2024 | By Clifford Rossi
Imagine the following scenario.
Militaries are facing off with increasing aggression in Europe and Asia. Nationalistic sentiments are taking root across the globe, while tensions over the control of...
February 9, 2024 | By Clifford Rossi
The start of a new year is a time of personal reflection and goal setting for many. For financial institutions and their risk managers, the turn of the annual calendar represents an opportunity to...
January 12, 2024 | By Clifford Rossi
Earlier this year, during the regional banking crisis, the banks in the Federal Home Loan Bank system (FHLBanks) suddenly found themselves at the center of controversy.
When several unstable...
December 15, 2023 | By Clifford Rossi
The largest banks in the U.S. are now facing major changes to the way they calculate capital operational risk. But the proposed modifications to regulatory capital are misguided and not reflective of...
November 17, 2023 | By Clifford Rossi
Every time a bank collapses, we hear alarm bells about ineffective risk measurement and mitigation – and, inevitably, regulators respond by adopting stricter rules. Lamentably, though, regulations...
October 13, 2023 | By Clifford Rossi
The rapid failures of several regional banks this spring continue to reverberate across the market, casting a pall over the riskiness of this segment of the banking industry. Despite an unusual...
September 8, 2023 | By Clifford Rossi
Now more than ever, banks need to bolster theircommercial real estate (CRE) risk management capabilities, as more and more cracks have emerged in CRE portfolios. Several market factors are driving...
July 14, 2023 | By Clifford Rossi
All bank board members and executive committees should carefully read the Federal Reserve’s recent findings on Silicon Valley Bank. SVB’s governance and risk management practices came under fire in...
June 9, 2023 | By Clifford Rossi
How many more failures are needed before the banking industry realizes that a more proactive, hands-on approach to risk management is clearly needed? Are more fiascoes really necessary to demonstrate...
May 2, 2023 | By Clifford Rossi
As it's currently constructed, the volatile U.S. housing finance system is dominated by a pair of government-sponsored enterprises (GSEs) and is vulnerable to systemic risk. The problem, in short, is...
April 6, 2023 | By Clifford Rossi
As someone who had a front-row seat at the largest bank failure in U.S. history, Washington Mutual, the demise of Silicon Valley Bank (SVB) brings back memories of how seemingly well-run banks can in...
March 14, 2023 | By Clifford Rossi
In financial markets rife with uncertainty and volatility, figuring out how to create and properly use a risk appetite statement (RAS) is a daunting task. The traditional process for addressing this...
February 17, 2023 | By Clifford Rossi
Costly, impactful operational risk events – ranging from fraud, money laundering and record-keeping failures to geopolitical risk and Libor manipulation – grabbed many headlines in 2022. The...
January 13, 2023 | By Clifford Rossi
The stunning collapse of FTX is an age-old story of management hubris, excessive risk-taking and insufficient regulation and risk management. But the catastrophe has also given us more food for...
December 16, 2022 | By Clifford Rossi
Machine learning (ML) is one of today’s hottest topics within the financial services modeling community. This technology holds great promise to expand credit availability, reduce losses and increase...
November 4, 2022 | By Clifford Rossi
The general prognosis for the overall economy in the U.S. and abroad doesn’t look bright, with increasing inflation, soaring interest rates, and massive volatility in financial markets. One exception...
October 7, 2022 | By Clifford Rossi
Risk managers grappling with multiple extreme events over the past couple of years must feel a bit like Dorothy and her Wizard of Oz associates, chanting a chorus of “Lions and Tigers and Bears, Oh...
September 16, 2022 | By Clifford Rossi
Expanding access to credit for millions of consumers with limited or no credit experience has been a long sought-after goal among policymakers and consumer advocates. Doing so in a manner that...
August 26, 2022 | By Clifford Rossi
Today, we find our profession at a critical inflection point with the rise of “Big Data” and artificial intelligence applications. Indeed, thanks primarily to advances in computer software and...
July 15, 2022 | By Clifford Rossi
Risk managers spend considerable time honing their skills in measuring and managing individual risks. Lamentably, far less attention has been given to understanding not only the interactions between...
June 17, 2022 | By Clifford Rossi
Our risk management frameworks have not advanced commensurate with the level and trajectory of risk over time. A new paradigm is therefore desperately needed.
Take, for example, enterprise risk...
May 13, 2022 | By Clifford Rossi
The Federal Housing Finance Agency (FHFA) is considering changes to how government-sponsored entities (GSEs), like Fannie Mae and Freddie Mac, apply credit scores in their assessment of mortgage...
April 8, 2022 | By Clifford Rossi
When a major risk event unfolds, whether it’s, say, the GFC or COVID-19 or Russia’s invasion of Ukraine, a degree of risk management introspection naturally follows. Financial institutions must...
March 11, 2022 | By Clifford Rossi
Market structural changes, machine-learning techniques and climate risk management initiatives will present some of the most interesting model risk management obstacles and opportunities for banks...
February 4, 2022 | By Clifford Rossi
Starting this month, Clifford Rossi - a former banking CRO and a current professor at the University of Maryland's Robert H. Smith School of Business - will be taking over as our CRO Outlook...
January 7, 2022 | By Clifford Rossi
In establishing its risk framework, it is likely your organization started with a language of risk. Aligned with each risk in this taxonomy is one or more key risk indicators (KRIs). But what,...
October 22, 2021 | By Brenda Boultwood
A risk taxonomy and risk-rating scales are foundational components of enterprise risk management (ERM). The former gives a firm the ability to pinpoint all of its risks, while the latter allows...
August 20, 2021 | By Brenda Boultwood
Every firm needs a comprehensive enterprise risk management (ERM) strategy to identify, assess and manage risks consistently across critical business processes, in all business units. But true risk...
July 16, 2021 | By Brenda Boultwood
How much risk would you be willing to accept to meet your company's performance objectives, if you were a board member of a CRO? Moreover, what types of limits, if any, would you place on...
June 18, 2021 | By Brenda Boultwood
Strong risk governance is about risk acknowledgement, accountability and clear mechanisms for risk-based escalations and delegations. Under a well-built governance framework, acknowledged risk-taking...
May 21, 2021 | By Brenda Boultwood
The crypto world is exploding in financial value and investment dollars. A Bitcoin now trades at more than $60,000 in a trillion-dollar market, while non-fungible tokens (NFTs) sell for millions. But...
April 16, 2021 | By Brenda Boultwood
For the largest banks, the Federal Reserve recently finalized rules that will impact stress tests, capital buffers, regulatory reporting and loss-absorbing capacity. In lieu of reporting certain...
March 19, 2021 | By Brenda Boultwood
Whether we're talking about the U.S.-China trade war or Brexit or climate change or the COVID-19 pandemic, the events of 2020 have highlighted that it's impossible to separate geopolitical and...
February 19, 2021 | By Brenda Boultwood
It's all things digital for financial services. The COVID-19 pandemic has accelerated the pace and acceptance of change in financial services, and new methods of banking and managing risk will...
January 15, 2021 | By Brenda Boultwood
The earth is trembling below the feet of the chief risk officer, who is now facing huge risk assessment and risk integration challenges. While there are no simple solutions, artificial intelligence...
December 18, 2020 | By Brenda Boultwood
Ahead of the recent U.S. presidential election, regulators doled out billions of dollars in penalties to several large banks, shining a clear spotlight on risk management and compliance failures. It...
November 13, 2020 | By Brenda Boultwood
Technology in risk and compliance has, to date, yielded limited success, even after many millions of dollars in investments. But, as more financial institutions adopt artificial intelligence (AI),...
October 16, 2020 | By Brenda Boultwood
Pre-pandemic, higher corporate profits were often delivered by under-investing in internal controls and minimizing any operational process redundancy. During the pandemic, inadequate redundancies for...
September 18, 2020 | By Brenda Boultwood
COVID-19 has forced businesses to rethink the way they treat and manage employees. Considering the work-from-home strategies adopted by many firms and the general economic decline, there is now an...
August 21, 2020 | By Brenda Boultwood
Prospering in the new normal will require a keen focus on the customer and risk management team skill sets that enable organizational agility. Business managers decide daily the risks that are worth...
July 17, 2020 | By Brenda Boultwood
Many of us grew up thinking of all the places we could go and the problems we could solve, a la the main character in Harold's purple crayon. Harold's special crayon allowed him to...
June 12, 2020 | By Brenda Boultwood
Whether in good times or bad, risk-taking is how companies generate earnings. In times of crisis, the effectiveness of response determines an organization's agility and resilience.
If corporate...
May 15, 2020 | By Brenda Boultwood
Times get tough, life eventually settles to a new normal and we plow on. It's now time to rethink how we should work, rather than continue to navigate within the old construct. Looking ahead, in the...
April 17, 2020 | By Brenda Boultwood
An economic system balances in a seemingly precarious equilibrium. It is not unusual for a CRO to be asked how his or her organization will be impacted under a variety of circumstances, including...
March 20, 2020 | By Brenda Boultwood
Many organizations now have a chief data officer or “data czar(ina).” Organizations increasingly want to be data driven, and change company culture to value data in the same way they would, say,...
February 14, 2020 | By Brenda Boultwood
On the heels of ushering in a new decade, it makes sense to reflect on not only how far we've come but also where we are headed. While risk management is perhaps not completely...
January 10, 2020 | By Brenda Boultwood
Recent scandals involving Australian and UK banks leave little doubt that we must design integrated enterprise risk management (ERM) approaches that weave “common sense” into decision-making. When...
December 20, 2019 | By Brenda Boultwood
In September 2019, when a shortage of short-term fund supply caused the repo interest rate to soar, Fed intervention was required to keep it under control. At the time, some wondered if this event...
November 8, 2019 | By Brenda Boultwood
[Editor's Note: This month, GARP is transitioning from Cliff Rossi to Brenda Boultwood as our CRO Outlook columnist. We'd like to thank Cliff for all of his thought-provoking contributions, and also...
October 18, 2019 | By Brenda Boultwood
Having had a front-row seat to the excesses of the boom that fueled the financial crisis of 2008-2009, I've been asked over the years what suggestions I have for current and future risk managers in...
September 27, 2019 | By Clifford Rossi
The conservatorships of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac - one of the last major unresolved matters of the financial crisis - have recently received heightened...
August 16, 2019 | By Clifford Rossi
Policymakers, regulators and bankers were jolted from their collective complacency over the impact of nonbank companies on the financial system with Facebook's announcement of its Libra digital...
July 19, 2019 | By Clifford Rossi
While the start of summer has many of us thinking about vacations and outdoor activities, it also kicks off hurricane season, along with the onset of other severe weather-related patterns....
June 14, 2019 | By Clifford Rossi
During the financial crisis, hundreds of nonbank mortgage lenders and servicers went bankrupt. In the decade since, they have enjoyed a renaissance of sorts.
The rise of nonbanks in...
May 9, 2019 | By Clifford Rossi
The Qualified Mortgage (QM) rule is a good example of well‐intended but poorly designed policy. QM came about as part of the Dodd‐Frank Act to address serious issues during the mortgage boom...
April 18, 2019 | By Clifford Rossi
The recent Congressional hearings on U.S. credit reporting companies (CRCs) put the spotlight again on a corner of the consumer credit market sorely in need of market and regulatory reform. A...
March 15, 2019 | By Clifford Rossi
In response to a string of high-profile risk management incidents experienced over the last several years, Wells Fargo recently released its Business Standards Report, summarizing...
February 15, 2019 | By Clifford Rossi
Blame it on indigestion from all the holiday feasting recently that's left me more pessimistic heading into the new year, but 2019 appears to be one of the most perilous in decades in terms of...
January 18, 2019 | By Clifford Rossi
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