Banks around the world are rethinking how they manage risk as rapid digital transformation, cyber threats, and economic uncertainty reshape the financial system, according to a new report by Ernst & Young (EY).
The professional services firm, in its 15th annual Global Bank Risk Management Report, said financial institutions are moving away from traditional risk management approaches and adopting more integrated, technology-driven frameworks to navigate a volatile global environment.
“In today’s fast-changing financial landscape, banks must adopt a holistic and forward-looking approach to risk management,” the report stated, noting that risks confronting banks have become “dynamic, nonlinear and interconnected”.
The report highlights how chief risk officers (CROs) are taking on a more strategic role within banks, helping to shape business decisions rather than simply monitoring risks.
According to the survey, risk leaders are increasingly using artificial intelligence (AI) and data analytics to anticipate emerging threats and guide corporate strategy.
The findings come at a time when the global banking sector faces mounting pressures from slower economic growth, rapid technological change, and evolving regulatory expectations.
Cybersecurity and technology-related risks have emerged as the most pressing concerns for banks. The report found that 86 percent of CROs ranked cybersecurity and technology vulnerabilities as their top risk, reflecting growing fears about digital attacks, system disruptions, and data breaches.
Credit risk ranked as the second most significant concern, cited by 62 percent of respondents.
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This reflects softer economic conditions in several markets as well as the rapid growth of private credit, which is reshaping traditional lending dynamics.
Data risk was identified by 41 percent of respondents, while digital fraud and financial crime remain persistent challenges as financial services continue to migrate to digital platforms.
The growing reliance on digital infrastructure has also forced banks to accelerate investments in advanced technologies to strengthen their risk management systems. According to the survey, 55 percent of CROs are prioritising the adoption of AI-enabled capabilities to improve risk monitoring and decision-making.
Anthony Oputa, managing partner for West Africa at EY, said the report provides a roadmap for banking leaders navigating the complex risk environment.
“The report serves as a vital resource for banking leaders seeking to understand and respond to the shifting risk landscape,” Oputa said. He added that the firm remains committed to helping financial institutions build stronger and more sustainable businesses through integrated risk management practices.
Industry analysts say the findings reflect a broader transformation in banking, where risk management is increasingly embedded within strategic planning and business operations.
Ashish Bakhshi, clients and industries leader for West Africa at EY, said the risk environment has become more volatile as technology continues to reshape the financial system.
“Banks must embrace a strategic mindset that balances risk mitigation with growth opportunities,” Bakhshi said. “Rapid technological innovation and evolving regulatory landscapes are fundamentally changing how institutions think about risk.”
The report also highlights how banks are strengthening governance and internal controls to address these emerging challenges. About 52 percent of CROs said they are focusing on improving governance frameworks, while 43 percent are enhancing their risk identification and assessment capabilities.
Talent development is also becoming a priority as banks seek professionals with new skill sets to manage increasingly complex risk environments.
Nearly one-third of CROs surveyed said they are focusing on hiring and developing specialised talent.
Digital expertise is particularly critical. The report found that 71 percent of respondents believe future risk management professionals will need strong digital capabilities, including expertise in technology, data analytics, artificial intelligence, and programming.
Abiodun Akinnusi, banking and capital markets leader for West Africa at EY, said the pace of change in the industry has accelerated to an unprecedented level, forcing banks to rethink traditional risk models.
“Financial institutions face not only traditional financial risks but also emerging challenges from digital transformation and evolving customer expectations,” Akinnusi said.
He noted that banks are increasingly integrating technology, governance, and talent development to build more adaptive risk frameworks that can respond to rapidly evolving threats.
“Our clients recognise the importance of combining technology and governance with talent development to create resilient organisations,” he said.
About 63 percent of CROs surveyed expect regulators to increase oversight of technology and AI-related risks, while 51 percent anticipate greater investment in risk data and analytics to meet supervisory expectations.
The report also notes that the regulatory landscape is becoming more fragmented as national authorities adopt localised rules around data, technology, and operational resilience. For banks, this means balancing compliance with agility as they adapt to shifting regulations while continuing to innovate.
Looking ahead, the report suggests regulatory scrutiny will intensify as supervisors seek to keep pace with technological change in the banking industry.
