Follow TopicFollow Contributor Share Feedback
Three Lines of Defense: Failed Promises & What Comes Next

Three Lines of Defense: Failed Promises & What Comes Next

by Erich Hoefer, Mark Cooke, Thomas J. Curry

Aug 21, 2020

Thoughts

The financial industry trade group for operational risk leaders, ORX, recently reported a sharp decline in non-financial risk related loss incidents reported by its member banks over the past three months.1 While it is possible that banks have universally embraced higher business standards and risk controls – amidst one of the most challenging business environments in history – we find alternative explanations more convincing. These range from the benign (e.g., a reduction in business volumes) to the more worrisome: that existing risk reporting systems are simply failing to cope with “the new normal” and that risk events are going unreported and—worse—undetected altogether.

For the past decade, spending on non-financial risk management has exploded. Much of this was driven by legislative and regulatory changes implemented in the wake of the Financial Crisis and earlier scandals at firms like Enron. Banks in particular have invested billions into processes and systems for governance, risk and compliance (GRC) and intrusive surveillance and monitoring tools have become de rigeur. 

This content is available to paid Members of Starling Insights.

If you are a Member of Starling Insights, you can sign in below to access this item. 

 

If you are not a member, please consider joining Starling Insights to support our work and get access to our entire platform.  Enjoy hundreds of articles and related content from past editions of the Compendium, special video and print reports, as well as Starling's observations and comments on current issues in culture & conduct risk management.

Join The Discussion

See something that doesn't look quite right?

We strive to provide high quality and accurate content at all times. With that said, we realize that sometimes links break, new information becomes available, or there is something that you feel we may have missed.

If you see something that you think we should be aware of, we would love to hear from you. Feel free to drop us a note below and leave your name and contact info if you'd like to hear back from us.

Thank you for being a key part of the Starling Insights community!