We’ve all heard the dutiful dictates: If a bank is serious about risk management, then it will be serious from the top down. Surprisingly—or maybe not—the framework for risk management in a bank is fundamentally no different today than it was prior to the credit crunch and recession. In fact, the risk function continues to be considered a handbrake on growth as chief economists and their macro perspectives are often divorced from the bank’s own strategy function. For many banks, the rocky relationship with risk continues despite all the admonitions and public handwringing. Perhaps it would help to re-review what we call “The Seven Tenets of Risk Management” to see why the paradigm has neither been altered nor fundamentally changed in this new world order.
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