Transformation in Risk Management

Abstract

Risk management is a quite critical, but less well known, function played by the global financial system. It allows for the valuation, pricing, transferring, holding, hedging, covering of risks—of a financial or pure nature. Whilst banks and other traditional intermediaries are running the “new” risk of being competitively leapfrogged by emerging digital players, even their risk management function needs to develop and innovate, to allow them to retain their competitiveness in their core businesses—starting from the lending one. Risk management has evolved in the past by quantum leaps: getting more quantitative, statistics-based, and then more holistic and proactive. It now needs to turn “digital”, promising to revolutionize not just the world of banking, but the way corporates and individuals manage their own financial and non-financial risks, via the financial system—with a more augmented, meaningful and integrated definition of “risk management”