The current business environment is beset with new and ever-more-baffling risks, from
But to Jodi Richard, vice chair and chief risk officer at U.S. Bank, this moment is also one that banks can use to streamline operations and develop new and profitable relationships. Those risks also tend to influence one another, she said, meaning that savvy bankers need to consider not only headline events but what the secondary effects of those events might be.
"As risks have become more intertwined, they often compound on one another," Richard said. "For example, geopolitical risks can create market volatility, interest rate fluctuations, inflation, cyber risks, sanctions exposure, or model fluctuations. We must manage risks together and not in a silo."
Richard, who joined U.S. Bank in 2014 and has been in her current role since 2018, said the biggest challenges right now are external threats — namely cyberattacks, which have become more sophisticated and effective thanks to advances in artificial intelligence in recent years.
"Just as we're using AI technologies to combat fraud and maintain residency, the bad actors are using AI against us," Richard said.
There are also opportunities, however, particularly in the deregulatory push brought on by the Trump administration. Richard said that a number of redundancies had been built into the first and second lines of defense that might be streamlined, thus making a bank's compliance obligations easier and less costly to meet. But bankers have to avoid going too far, either by not taking compliance laws seriously enough, increasing risk appetite or degrading internal controls, she said.
"Independent risk oversight and testing still matter, and we should not throw out well-established and proven frameworks," Richard said. "Instead, we should apply judgement, expertise and modern technologies and analytics to strengthen risk management."
What keeps banks working amid all of the uncertainty out there in the world, Richard said, is the banker's business acumen and judgment. Risks have always been present and always will be, she said, but so long as bankers understand how to identify value and manage their lending risks, the financial world will continue to turn.
"Our teams need to learn the business of banking so they can appreciate the fundamentals that make our industry work," Richard said. "Products come and go, and the environment shifts, but the basics of payments and exchanging money are constant."
