The post-pandemic era has fundamentally transformed the risk landscape for banks, presenting both challenges and opportunities that demand a reevaluation of traditional risk management approaches.
As risk management evolves in response to increasing complexity and speed, adopting a more strategic approach that enhances agility has become essential. According to the 2025 EY Global Risk Transformation Study, surveying 1,200 risk professionals from firms that span 21 different sectors, organizations that embrace this strategic risk framework — the risk strategists — are significantly better positioned to navigate these complexities, reducing unexpected risks by 48% and improving incident response capabilities by 35% compared to their more traditional peers.
For bank directors, fostering a collaborative dialogue with their chief risk officers (CROs) around the following strategic imperatives can guide their organizations toward a more resilient future. These imperatives reflect emerging leading practices identified through global research and board engagement.
- Expand and Deepen Scenario Planning
Scenario planning must evolve from a compliance exercise into a strategic board-level tool. Boards should mandate an approach that integrates geopolitical, climate and cyber risks into multi-horizon scenarios. These scenarios should leverage AI-driven predictive analytics to model complex interdependencies and accelerate response times. Outputs must be embedded into strategic planning and risk appetite decisions so that stress tests translate into real-world actions. The risk transformation survey found that CROs are already signaling a shift in this direction: 52% prioritized enhancements in risk measurement, stress testing and scenario analysis, and 56% planned to expand political risk assessments.
- Use AI to Transform Risk Management and Drive Better Outcomes
As artificial intelligence reshapes risk management practices, the importance of data quality has come to the forefront. In the most recent EY/Institute of International Finance (IIF) global bank risk management survey, 64% of CROs identified data quality — encompassing accuracy, completeness, timeliness, validity, consistency and uniqueness — as the most pressing data usage risk over the next year. This focus underscores the data prerequisite required to unlock AI’s potential to enhance risk management outcomes across areas such as credit risk, fraud risk and regulatory compliance.
- Invest in Financial Risk Management Capabilities to Avoid Complacency
CROs recognize the ongoing importance of financial risks and are planning significant enhancements to their risk management strategies, platforms and analytics. Additionally, they are advocating for a more forward-looking approach to identify and respond to emerging risks, such as the recent concerns surrounding private credit. While non-financial risks, such as cyber threats, operational resilience and geopolitical risk, dominated current priorities in the EY/IIF survey, boards must not neglect financial risk management.
- Attract and Develop the Risk Professionals of Tomorrow
Despite the increasing reliance on technology and data in risk management, human talent remains crucial. Boards should encourage management to prioritize hiring candidates with strategic thinking abilities who can connect risk insights to business strategy and who demonstrate curiosity and adaptability. Additionally, the talent base can be expanded and diversified by considering candidates from non-traditional backgrounds who have deep digital acumen and the ability to adapt to an increasingly nonlinear, accelerated, volatile and interconnected risk environment.
- Optimize and Adapt the Organizational Model to Changing Risk Profiles
To meet increasing business demands and changing risk profiles, 64% of CROs in the EY/IIF survey expected to add more risk management resources to the front line in the next three years, while discussions around optimal operating models are becoming more frequent, focusing on centralizing essential services or embedding capabilities within business units. While only 16% of CROs reported current outsourcing of elements of their risk operations, 35% were leveraging right-shoring. However, over the next three years, respondents estimated that these figures would rise to 40% and 64%, respectively.
By leaning into a discussion with management on these five strategic imperatives, bank directors can help their institutions become more agile and better equipped to handle evolving risks. The benefits are clear: Banks that manage risks effectively can better avoid the losses, reputational impacts and regulatory issues that can slow growth, creating a strategic advantage in a competitive market.
The views reflected in this article are the views of the author and do not necessarily reflect the views of Ernst & Young LLP or other members of the global EY organization. US SCORE no. 29122-251US
