@ the IERP® Global Conference, August 2024
The views and opinions expressed in this article are solely those of the featured speakers and do not necessarily reflect the official view or stance of the IERP®. The content is provided for informational purposes only.
Explaining her role as Senior Vice President, Head of Risk Strategy, Transformation & Enterprise Risk Analytics for the RHB Bank Group, Zernil Lurthanathan said that it was primarily working with the CRO’s team to shape and change the way of operating. “When people say they cannot do something, the team and I come in and show them how to do it,” she said. Understanding that people fear change, they talk to the people involved in the business, gain an understanding of their needs and issues, then customise solutions.
Adding that embedding analytics within risk culture drives the right behaviours, she said that besides being important for regulatory purposes, it can also shape the data from other perspectives. While this allows an appropriate thinking process to be integrated as well, it adds value over and above what is required. Addressing the contention that AI and machine learning will some day replace human workers, she urged risk professionals to develop the ability to analyse insights rapidly in order to make quick decisions.
Currently, slow or dated systems pose major challenges; the data that is derived through these often needs a lot of cleaning. As leaders, therefore, risk professionals should shape the functions that they drive, and design within the paradigms they operate in, to enable themselves to move fast enough. They need to understand processes and policies, how these affect them internally and externally, and how to meet the pressures of regulatory demands and external sources. To do this and build risk and operational resilience, they have to look into the whole ecosystem.
“Look into the whole dimension, the big picture, supply chain, impact,” Zernil stressed. “(Look at) How to nurture customers to come on the journey with us. It’s not just us, it’s the whole ecosystem we are looking at today.” A key risk area today was ‘Zero-Day Decisioning’ and the need to be able to do real-time data-scrubbing in order to derive insights quickly and efficiently. “You need bite-size use cases to drive such insights,” she said. “If you don’t have the data and centralised platform in a unified single customer view, it will be difficult.”
But how does the organisation build this? It needs to know what its imminent threats are, and it can do this by having insights. She cautioned that extended slides, multiple reports and detailed dashboards are not the way to do things. “If you want to really improve, you have to make sure that the dashboards and forward-looking views you are building, can be used for decisioning,” she advised. Remarking that there was a confluence of disciplines that was driving risk decisioning, she said she embeds this in her function, and in the teams that she hires.
Her team members are not hired based on whether or not they have backgrounds in risk; rather, she gauges how smart they are, and how much they can bring to the position. “I test them on multiple different languages including analytical capabilities,” she explained. “Different pockets of people bring the best ideas to drive the change you want to see.” Acknowledging that many organisations take a methodological approach but fail, she said that this model needed to be changed because of the range of disruptors that businesses were vulnerable to, today.
Because the information required must provide the correct insights for the organisation to be able to act appropriately and on-demand, the team providing it must be strong enough to pull out usable information from the ‘noise’ surrounding it and present what the actual issues are, she clarified, adding that the information must be analysed over a period of time to see what metrics and indicators to change, to improve the organisation’s risk culture. “These active conversations take place arising from the insights we see on a weekly basis,” she said.
The results then move to a council and thereafter to the board for updating. Besides applying analytics, quality checks are undertaken, and stakeholders are also polled on whether the initiatives make sense. All this cannot be done in isolation. “You are looking at how to be efficient,” Zernil said. “For you to get there, you need to merge many talents. You need to have the talent and know how to move. As leaders, you have to remove the roadblocks along the way. You cannot control something from happening, but you can measure the impact, and ensure it does not repeat itself.”
Agility is key. She said, “Rule of thumb – you see or implement something – apply the agile principle. If that doesn’t work, kill it, move on, redo, go back to the drawing board.” She and her team review their work every three months to see if what they have implemented is working. But it is okay, she emphasised, if something is not working in a particular environment because what works for one organisation may not work for another. Efforts must be customised, and the right culture must be encouraged from the ground up.
Having the right internal governance is imperative, and risk analytics should be applied beyond just regulatory compliance. Commenting on the use of generative AI, she said that it needs more experimentation which will take time but its biases and the ‘noises’ prevalent today must be fixed before it can be rolled out for decision-making. She acknowledged its application to low-value work, remarking that there were some areas where it could help. However, she stressed that when there was a confluence of technologies, risk professionals needed to be ‘ten times ahead.’
This was particularly applicable when businesses wanted to scale aggressively in domains they were not entirely familiar with. “As risk practitioners, what you need to look out for are opportunities and segments to target, to grow the business,” she advised. “You need the right insights to help you. Hire people with common sense. If you are leading a team, let them experiment…let them show you what they can do. If you don’t, we will never scale within the risk profession; we will just be traditional risk managers.”
