Every article published in the Journal is reviewed by at least one and often several members of The RMA Journal Editorial Advisory Board. Late last year, 12 members of the board participated in a survey asking about the most serious challenges facing banks today.
Below are the top 10 concerns of Editorial Advisory Board members. Topping their list of concerns was economic uncertainty in the U.S. and globally. The opinions expressed are their own and do not necessarily reflect the positions of their institutions.
1. Economic Uncertainty both in the U.S. and Globally
“Southern Europe risks destabilizing the north and will limit its growth. Middle East instability has resulted in wasteful spending by the U.S. and other alliance supporters. The Middle East has yet to achieve its considerable potential.”
Rona Pocker, Turnaround Risk Management
2. Regulatory Overload
“The Dodd-Frank Act serves as a super open-ended regulatory credit card that allows, encourages, or requires regulators to charge new regulations to us regulatees, whether we need it or not. To make matters worse, the agencies have overlapping responsibilities, and the history of the agencies playing together is not very encouraging.”
Dev Strischek, Senior Credit Policy Officer, Credit Risk Management Division, SunTrust Banks, Inc.
3. Gridlock in Congress
“At the end of the day, it will be addressed, but at what future cost? It seems that ‘gridlock’ has existed more often than not in the history of all living Americans.”
William L. Perotti Jr., Chief Credit Officer and Chief Risk Officer, Frost Bank
4. Net Interest Margin
“Burdensome and increased regulations are causing net interest margins to be squeezed even further. Sound judgment—holding to good underwriting—and clear minds must prevail to avoid a repeat of throwing the baby out with the bath water!”
Mary Jo Taylor, Director, Multifamily, Capital Funding, LLC
5. Loan Growth
“The seeds of the next great credit implosion are being sowed. Longer maturities, fewer controls, lower returns, and underwriting liberalization are occurring.”
William L. Perotti Jr., Chief Credit Officer and Chief Risk Officer, Frost Bank
6. Systems/ IT Risks
“The ability of systems to keep pace with demanding regulatory changes, audit requirements, and cost reduction targets is a concern.”
Tom Brown, Managing Director, Nord LB, London
7. Execution Risk in New Initiatives
“New initiatives are desperately needed. The challenge is to explore and identify new avenues for earning profits while functioning within the confines of the legislative and administrative framework imposed on banks.”
Michael Weissman, Counsel, Levin Ginsberg, and Tales of Whoa columnist
8. Fraud
“Losses from operational risks, including fraud, are on the increase and bank management needs to devote more time and resources to this area. Cyber attacks and software glitches are included in this risk.”
Tom Brown, Managing Director, Nord LB, London
9. Regulatory Burden on Other Industries
“Not urgent, but extremely important.”
Robert Messer, EVP, CFO, American National Bank
10. Staffing Issues
“Staffing on the credit side is a challenge brought about by the industry itself. Strong credit talent takes time to develop, but the comparative financial and advancement allure offered by sales roles will cause many to commit to those avenues instead. If they don’t gravitate to sales, bankers need to believe they have an attractive future in credit within the organization, so they don’t have a reason to look outside the bank to continue their chosen career path.”
John Cassis, Vice President, Credit Management, Wells Fargo Bank, N.A.
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This post is an excerpt from the RMA Journal article “Journal Editorial Advisory Board Survey: Economic Uncertainty Tops List of Risk Management Concerns”. To read this article in its’ entirety, including all other comments from the Board, please log on to the RMA website and view the April issue: http://www.rmahq.org/thermajournal. Find out what additional concerns the Board discussed.
Since one of RMA’s purposes is to highlight issues and solutions, we invite you to share your own risk concerns with Journal readers. Send your comments to editor Kathie Beans (kbeans@rmahq.org), and if possible she will publish them in the Readers Forum section of an upcoming issue.
