How Risk Management Can Remain Fit for Purpose

In a recent opinion article in the Financial Times, Evgueni Ivantsov, Chair of the European Risk Management Council, argues that traditional risk management frameworks are no longer fit for purpose in an era defined by geopolitical upheaval and technological disruption.

Ivantsov contends that the rules-based international order that underpinned global stability for over 80 years is fading, replaced by a fragmented, power-driven geopolitical reality. The conflict in Iran, trade wars, and volatile financial markets are symptoms of this transformation. Simultaneously, the rapid rise of AI is rewiring the global economy, concentrating risk in ways that are not yet fully understood, fuelling equity bubbles, and amplifying market instability.

Against this backdrop, Ivantsov argues that conventional approaches — quantifying risks in silos and relying on capital and liquidity buffers — are increasingly insufficient. In a world of heightened uncertainty, risk quantification has become unreliable, and buffers designed for moderate shocks may prove inadequate against systemic events.

His prescription is clear: resilience, crisis preparedness, and contingency planning must take center stage. Stress testing must evolve from static exercises into dynamic, AI-driven war-gaming simulations, he argues. Regulators, too, must shift their focus beyond capital adequacy toward the robustness of crisis management frameworks, he contends.

“In a world where geopolitical turbulence and technological disruption amplify each other, the cost of inaction is simply too high,” Ivantsov concludes. “The institutions that recognise this challenge and act on it will not only be better prepared for the next crisis but will also be better positioned to thrive in the new world.”