The supervisory framework: Building a stronger defense
Many financial institutions have adopted a front office central supervision team within the first Line of Defense to assist supervisors with monitoring non-financial risks.
Managers of financial institutions are under pressure from boards of directors, investors, and regulators to (1) deliver improved and more transparent performance management data, and (2) effectively price for risk when making business decisions while (3) meeting regulatory expectations. In order to meet these demands, the industry must shift towards greater alignment between the risk and finance functions – a shift that is still in its early stages but expected to be of greater importance as institutions move towards a growth agenda.
Financial institutions that solve the risk and finance alignment puzzle stand to reap numerous benefits beyond improved compliance with regulatory mandates, including improvements to cost savings, controls, transparency, and better business decisions. However, expediting this alignment requires the tone for change to be set at the top.
This A closer look integrates findings from a recent global survey conducted by PwC on risk-finance alignment to address (a) why risk and finance alignment should be a priority for institutions (b) the key elements of an effective risk and finance alignment framework (c) the key obstacles to alignment and (d) what institutions should do now
A publication of PwC's financial services regulatory practice