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Lessons from 2023 Banking Collapses:ACCA’s Special Report on RiskGovernance

In a comprehensive analysis, the Association of Chartered Certified Accountants
(ACCA) has released a special report shedding light on the intricacies of risk cultures
within the banking industry and the vital lessons to be learned from the 2023 bank
collapses.
Titled “Risk cultures in banking: Where next?” The report explores the aftermath of
financial giants such as Credit Suisse and SVB’s collapse and emphasises the
imperative for the banking sector to evolve and revolutionise its approach to risk
governance and culture.
Rachael Johnson, ACCA’s Head of Risk Management and Corporate Governance for
Policy & Insights and the author of the report underscores the critical role of
transparency in preventing operational losses and reputational risks at banks. She
advocates for a robust risk culture that instils trust in information for resilience and
prudent risk-taking.
The report highlights the need for a paradigm shift in the perception of risk
management. It suggests that risk professionals, including accountancy experts, should
view risk management as a facilitator of positive outcomes rather than merely a
mitigator of negative events. The report delves into the importance of fostering effective
risk cultures that enable informed decision-making and knowledge-sharing through
surveys and engagements with ACCA members.
ACCA members within the banking industry contribute candid insights into compliance
challenges. While acknowledging the willingness for dialogue between banks and
regulators, the report identifies the complexity of behavioural science as a crucial area
demanding attention for successful risk cultures.
The report emphasises the human element in risk dynamics and asserts that risk is
more about human behaviour than mathematical models or process design flaws. It
presents ten action points for banks, advocating strengthened collaborations between
risk management, support units, and accounting functions to make a profound
difference.
In the concluding remarks, Pav Gill, Wirecard whistleblower and CEO/founder of
Confide, underscores whistleblowing as a powerful pillar of resilience. He urges
accountancy professionals to take pride in contributing to a transparent and ethical
environment, emphasising the intrinsic motivation behind choosing this profession.
ACCA’s report serves as a valuable resource, offering insights, recommendations, and
actionable strategies for the banking industry to navigate the complexities of risk
governance and emerge resilient in the face of unforeseen challenges.

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