By acting now, banks will help risk functions avoid being overwhelmed by the new demands. The trends furthermore suggest that banks can take some initiatives now to deliver short-term results while preparing for the coming changes. But the fundamental trends do permit a broad sketch of what will be required of the risk function of the future. No one can draw a blueprint of what a bank’s risk function will look like in 2025-or predict all forthcoming disruptions, be they technological advances, macroeconomic shocks, or banking scandals. McKinsey research suggests that by 2025, these numbers will be closer to 25 and 40 percent, respectively. Today, about 50 percent of the function’s staff are dedicated to risk-related operational processes such as credit administration, while 15 percent work in analytics. The change expected in the risk function’s operating model illustrates the magnitude of what lies ahead. ![]() But important trends are afoot that suggest risk management will experience even more sweeping change in the next decade. Risk management in banking has been transformed over the past decade, largely in response to regulations that emerged from the global financial crisis and the fines levied in its wake.
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