Peter Hughes: Have Banks Lost Control of the Risk Agenda?
In a post-crisis paper published by the Basel Committee on Banking Supervision they observed, “One of the most significant lessons learned from the global financial crisis that began in 2007 was that banks’ information technology (IT) and data architectures were inadequate to support the broad management of financial risks.”
The banks themselves have been uncompromising in their own assessments of their limited ability to effectively manage risk. For example, in a recent survey conducted by the Big 4 accounting and consulting firm EY they reported, “These problems (regulatory breaches and misconduct issues) have shaken boards' certainty about prevailing enterprise risk culture. An overwhelming 93% of Global Systemically Important Banks (G-SIBs) agree that weak oversight and controls led to the failures.”
This lecture will examine how, in the period leading up to the financial crisis, banks were able to take on such excessive but unreported risks. These circumstances will be viewed from the perspective of a regulatory framework that failed to forewarn and prevent the crisis and the misalignment of firms’ financial accounting and risk management systems that provided the backdrop to the risk management and reporting failures. The post-crisis operating environment in banks will be assessed in terms of the evolving regulatory and legislative framework and initiatives aimed at improving risk management and reporting.
Peter is an expert in risk accounting and a former banker with JPMorgan Chase and Abbey National (now Santander UK), a fellow of the Institute of Chartered Accountants in England & Wales, a member of the advisory board of Durham University Business School’s banking, risk and intermediation research group and a visiting research fellow at the Leeds University Business School.
Peter now devotes most of his time to researching next generation bank reporting methods and systems. His most notable achievement in this area is the codification of a new technique ‘Risk Accounting’. He has authored and co-authored numerous academic and practitioner papers on this and related subjects as well as teaching and presenting at conferences, webinars and in academia.
In his 28 year corporate career with JPMorgan Chase and Abbey National (now Santander UK) his roles included Head of Finance Shared Services, Head of Finance Advisory Services, Chief Operating Officer (Germany), Acting Head of Treasury & Trading (Germany), Head of Risk Management – Global Shared Technology & Operations, Country Senior Financial Officer (Brazil), Country Operations Executive (Brazil) and Regional Audit Manager (South America).
This is a PhD Lecture in Bank Risk Accounting organised by the Centre for Banking, Institutions and Development (CBID).