Today, we’re thrilled to sit down with Priya Jaiswal, a distinguished expert in banking, business, and finance. With her deep knowledge in market analysis, portfolio management, and international business trends, Priya has become a trusted voice in navigating the complex world of financial risk. In this conversation, we dive into the evolving role of risk management in banks, the emerging challenges they face, and how risk departments are reshaping their reputation to become strategic partners in innovation. From technological disruptions to building a risk-aware culture, Priya shares her insights on how the industry is adapting to a rapidly changing landscape.
How has the role of risk management in banks transformed over recent years?
Over the past few years, risk management has undergone a significant shift. Historically, the focus was primarily on financial risks—things like credit and market fluctuations. But now, we’re seeing a broader scope that includes operational and digital risks, driven by the rapid pace of technological change. The Chief Risk Officer, or CRO, has evolved from a back-office role to a strategic one, sitting at the table with senior leadership to influence long-term decisions. It’s no longer just about identifying risks; it’s about enabling the bank to take calculated risks for growth while staying within safe boundaries.
What are some of the most pressing risks banks are facing today?
There’s a lot on the radar right now, but I’d say the biggest emerging risks are tied to technology and digital transformation. Artificial intelligence, for instance, is a double-edged sword—it offers incredible opportunities but also introduces new vulnerabilities, like biases in algorithms or misuse by bad actors. Fraud and financial crimes are also escalating, with criminals leveraging advanced tools to exploit weaknesses. Beyond that, regulatory changes and third-party relationships are areas of concern, as they can create unexpected exposures if not managed carefully. It’s a complex web, and banks have to stay vigilant across multiple fronts.
How is technology, particularly AI, contributing to new risks for the banking sector?
AI is transforming banking, but it’s also opening up new risk avenues. For one, there’s the risk of flawed or biased models—if the data feeding these systems isn’t representative, it can lead to poor decision-making at scale, whether in lending or fraud detection. Then there’s the cybersecurity angle; as AI tools become more accessible, they’re being weaponized by fraudsters to create sophisticated scams, like deepfakes or automated attacks. Banks have to invest heavily in monitoring and safeguarding these systems, which is a constant cat-and-mouse game with threat actors.
Why do some refer to risk departments as the ‘Department of No,’ and how can that perception be changed?
The ‘Department of No’ label comes from the traditional view of risk teams as gatekeepers who often shut down ideas due to potential downsides. It’s rooted in their role as a control function, focused on compliance and caution. To shift this mindset, we’re working to reframe risk as the ‘Department of How’—collaborating with other teams to find ways to make innovative ideas work within the bank’s risk tolerance. This means getting involved early in discussions, offering solutions, and showing that we’re enablers of progress, not just blockers. It’s about building trust and proving that risk management adds value.
As banks grow in size, how does the approach to risk management need to adapt?
Growth changes everything in risk management. In smaller banks, processes can be informal—decisions might happen over a quick chat in the hallway. But as a bank scales, you need more structure. Formal policies, documentation, and governance become critical to satisfy regulators, boards, and even customers who expect transparency. At the same time, you can’t let bureaucracy stifle innovation. It’s a balancing act—creating robust frameworks while maintaining the agility to seize new opportunities. Larger banks also face heightened scrutiny, so demonstrating that every decision aligns with a defined risk appetite is non-negotiable.
What does it mean for a new product or service to fit within a bank’s risk appetite?
Fitting within a bank’s risk appetite means ensuring that any new initiative aligns with the level of risk the bank is willing to take, as defined by its board and leadership. We assess the potential downsides—financial, operational, reputational—and weigh them against the rewards. If something falls outside that comfort zone, we don’t just say no; we explore controls or mitigations to bring it in line. This could mean enhanced monitoring, additional safeguards, or phased rollouts to test the waters. The goal is to support innovation while protecting the bank’s stability.
How do you foster a culture where everyone in the bank thinks about risk?
Building a risk-minded culture starts with embedding risk into the fabric of daily operations. Policies and procedures are key—having clear guidelines and accessible resources so employees don’t have to second-guess what to do. Training helps, but it’s also about leadership setting the tone, showing that risk isn’t just the risk team’s job; it’s everyone’s responsibility. We encourage cross-department dialogue, so whether you’re in operations or customer service, you see yourself as part of the risk management ecosystem. It’s about making risk a natural part of decision-making at every level.
Why is communication across different areas of the bank so critical for effective risk management?
Communication is everything in risk management because risks don’t stay neatly in one department—they spill across silos. If the risk team isn’t talking to the front-line staff or the tech team, blind spots emerge. Horizontal information flow ensures everyone understands the broader picture and can spot potential issues early. For example, when launching a new product, input from operations, compliance, and risk together helps identify pitfalls before they become problems. It’s about breaking down walls and ensuring that risk insights inform every corner of the bank.
What is your forecast for the future of risk management in banking over the next few years?
I see risk management becoming even more integrated into the strategic core of banking. With technology evolving at lightning speed, risks like cyber threats and AI-driven disruptions will only grow, requiring more sophisticated tools and proactive approaches. At the same time, I expect regulatory expectations to tighten, pushing banks to be more transparent and data-driven in how they manage risk. The role of the CRO will continue to rise in prominence, acting as a key advisor to the board and CEO. Ultimately, I think we’ll see risk management not just as a safeguard, but as a competitive advantage for banks that get it right.
