Creating a modern central Risk function within a newly integrated Banking Sector giant

The Problem

As a challenging programme of integration was approaching completion, our banking client could be forgiven for thinking that the heavy lifting was over. However, the task remained to restructure and optimise the fragmented Risk functions within Wholesale Credit, comprising over 1,500 combined roles. This needed to be more than recreating the legacy functions in a single business. The aim was to design a modern, central Risk function fit for a modern financial services business that could coordinate three lines of defence across the newly integrated organisation.

Our Solution

Our first priority was to work with the Chief Risk Officer to design and agree an approach for developing a new, integrated Risk function. Once this vital foundation was in place, we were able to turn to delivery. Our key activities were to:

  • Develop a Target Operating Model (TOM) for the centralised Risk function which represented the process flows and key accountabilities including: policy management, risk appetite, delegated authority oversight, portfolio management, sanctioning referral and oversight, credit rules and their management and oversight. Our approach to TOM design is to represent, on a single page, how the new function will operate, going beyond dry, technical organisational structures. Our clients find that this is an effective approach for communicating to all parties what organisation change will mean for them and for surfacing potential issues at an early stage.
  • Design the key functions and accountabilities set out within the operating model and demonstrate how they would deliver three lines of defence. We used the model as a framework to map existing organisational functions. This allowed us to test the completeness of the new top level structures and meant that as the lower levels were developed it was easier to design what needed to be included and where the boundaries lay.
  • Ensure the new structure and roles were approved by the Executive team, the CRO and the wider Risk community and change programme. We held multiple workshops to make sure that all parties understood and approved every aspect of how the new function would operate as well as the required resources.
  • Allocate staff to the new function. Our final task was to develop common role definitions, and help our client to allocate existing staff to these new roles, through an objective appraisal of their skills sets.

Client's Benefits

The final structure had ‘buy in’ from the Executive team. It was understood that it had been derived through a process of objective and rational design rather than put together piecemeal or by diktat. Furthermore, it was clear how the structure would actually operate and how people would execute their roles on day one. This enabled our client to move to the new structure with minimal disruptions and with savings of over 200 staff.