It is now widely agreed that the credit crisis and ensuing economic downturn that rocked the banking sector were caused in large measure by the fact that no one understood the scope and scale of the risks banks were taking and the disastrous consequences of these risks for the global economy.
Recent economic metrics suggest the downward the spiral has stopped. Banks that will thrive in the new economy are taking a hard look at how they run their businesses. At the top of their priority list is reviewing their risk management plans and processes to ensure that they have more transparency with the risks that they are undertaking as they execute their respective business plans. In a recent KPMG survey of senior executives in the banking and financial services industry nine out of 10 respondents said they were creating or modifying their risk management plans because of the economic crisis.