Is your Risk & Control function adding value to the business… or is it seen as a hindrance to progress?

This week, Lloyds Bank announced that it was cutting jobs in risk management after an internal review found the function was a “blocker to our strategic transformation”*.

For those of us in risk and control functions, this should come as no shock. Indeed, many of us have encountered resistance from the business when it comes to our initiatives. It may appear that numerous executives have a negative attitude towards control, but that explanation is too simplistic. We have the potential to find a more effective approach.

The landscape has certainly shifted, and it's crucial to prioritize delivering value to the business. We need to establish a framework that enables the business to focus on customer needs, streamline administrative tasks, and accomplish its strategic objectives.

How do we do that?

We need to evolve and take a different approach to risk management.

Let's begin by taking the conversation to a higher level and gaining a deeper understanding of the strategic goals of the business. Our goals as risk managers should be completely in sync with the objectives of business executives. After all, they are our valued customers! Intelligent risk-taking should be encouraged.

Then, we should reconsider our approach and embrace Agile techniques and philosophy. By developing minimum viable risk and control frameworks and continuously iterating them, we can ensure they are both effective and cost-efficient.

It is crucial to conduct risk assessments throughout the development process of new products and digital transformation initiatives, rather than waiting until the end. Otherwise, we are positioning ourselves as obstacles, hindering the delivery of products to the market.

Now let's move on to evaluating our control design. Are we using "checker-maker" excessively, or are we implementing innovative methodologies when establishing controls?

From a strategic standpoint, it would be advantageous to implement automated controls and monitoring systems. By leveraging cutting-edge technologies such as AI, Robotics, and Big Data Analytics, we can efficiently review transactions and address any issues with minimal intervention required from the business.?

Finally, let′s use Lean Manufacturing to streamline our governance processes. What does not add business value should be out of the window.

Let me hear your thoughts.

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Copyright 2024 Daniel Espejel

*Quinio, A. (2024, April 9). Lloyds Bank Axes Risk Staff After Executives Complain They Are a ‘Blocker.’ Financial Times. https://www.ft.com/content/6951335c-07f0-4e92-bd53-4fd69e6afa90