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Strength Training for Banks

To lay the groundwork for “getting to strong,” consider starting with these elements


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Today’s complex environment challenges many banking institutions to re-imagine and re-examine their risk management programs. At the same time, spurred on by public pressure, regulators have raised their expectations even higher. In fact, this push for excellence even has its own tag line, “getting to strong,” which is a play on the regulatory scale in which “strong” is the highest rating. [1], [2] But scratch below the surface and you’ll find very few details on exactly what it takes to “get to strong.”

There are four key elements banks should consider putting in place to have a risk management program that could posture itself as “strong.” These elements have not really changed over time, but their breadth and depth have.

In this series, we will explain how each of these elements may be brought to life, offering a possible blueprint for working to strengthen risk management capabilities and addressing regulatory concerns. In each area, suggestions are drawn from helping clients shore up their capabilities. While this overview offers a quick scan of each element, more detail will be coming soon in subsequent white papers that dive deeply into each one of these elements.

 

 1 While today, this rating primarily applies to the larger institutions known as Systemically Important Financial Institutions (SIFIs), the same measures can apply to a wide range of banking institutions.
 2 http://www.federalreserve.gov/boarddocs/srletters/2004/SR0418a1.pdf

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