The risks a financial institution is facing, are highly dependent on its business model and strategy. Risk management is closely linked with this business model and strategy.
KBC has a clear strategy to be able to adapt to an ever-changing environment. For example, customer behavior is changing more rapidly than ever, with technological advances and digitalization as catalysts. Furthermore, not only the competition but also the pressure from regulators is increasing. The macroeconomic environment also remains particularly challenging, with two human tragedies occurring in quick succession: first Covid-19, then the war in Ukraine.
These structural changes also have an impact on the risk function, which must adapt to remain relevant in this changing environment. We see more and more a shift from traditional financial risks towards non-financial risks (e.g., IT and cyber risks, 3rdparty risks, model risks, anti-money laundering). These risks are not new but have become increasingly important in recent years. In addition, new risks like ESG-risk have emerged, especially in relation to climate change.
Therefore, it is important that risk managers understand the business activities to proactively identify and mitigate risks, whilst being agile to act quickly in case of new challenges.