Financial institutions face an increasing number of industry risks—making it more and more important for executives to identify and address potential threats before they negatively impact their business.
The 2020 Risk Survey—presented by Bank Director and Moss Adams—includes insights from directors, chief executive officers, risk officers, and senior executives of US banks below $50 billion in assets.
The survey focuses on the top risks facing financial institutions today.
Here's a look at some of the 2020 Risk Survey's findings, according to Bank Director.
Summary of Findings
- Scaling Back on Stress Tests. The Economic Growth, Regulatory Relief and Consumer Protection Act, passed in May 2018, freed banks between $10 billion and $50 billion in assets from the Dodd-Frank Act (DFAST) stress test requirements. While last year’s survey found that 60% of respondents at these banks planned to keep their stress test practices in place, participants this year reveal they have scaled back (7%) or modified (67%) these procedures.
- Ready for CECL. More than half of survey respondents say their bank is prepared to comply with the current expected credit loss (CECL) standards; 43% indicate they will be prepared when the standards take effect for their institution.
- Cyber Anxiety Rising. Eighty-seven percent of respondents say their concerns about cybersecurity threats have risen over the past year. This is the top risk facing the banking industry, according to executives and directors. Further, 77% say their bank has significantly increased its oversight of cybersecurity and data privacy.
- Board Oversight. Most boards review cybersecurity regularly — either quarterly (46%) or at every board meeting (24%). How the board handles cybersecurity governance varies: 28% handle it within a technology committee, 26% within the risk committee and 19% as a full board. Just one-third have a director with cybersecurity expertise.
- Climate Change Overlooked. Despite rising attention from regulators, proxy advisors and shareholders, just 11% say their bank’s board discusses climate change at least annually as part of its analysis and understanding of the risks facing the organization. Just 9% say an executive reports to the board annually about the risks and opportunities presented by climate change. More than 20% of respondents say their bank has been impacted by a natural disaster in the past two years.