Best Use of Thought Leadership
As the world focuses on transitioning to a low-carbon economy, the Financial Services sector has a huge role to play. However, the creation of innovative sustainable product offerings, and delivery against public commitments, creates new risks that need to be managed effectively. EY teams came together to devise a unique piece of thought leadership – based on experience working in regulators, sustainability and risk management – to help organisations identify, mitigate and manage these rapidly evolving risks.
EY’s work with a leading global bank helped them to develop sustainability offerings with confidence, whilst managing these new risks. Sustainability is a complex and rapidly evolving area, in which businesses are reliant on judgement and risk management to meet the ever-evolving regulatory and customer expectations, which vary by jurisdiction. To address this problem, EY teams brought together its financial services, risk and sustainability expertise to assess global regulatory expectations and market practice, and to create a unique suite of thought leadership, including control frameworks.
EY’s programme of support was based on eight key pillars across the operating model and value chain. EY used its industry-leading approach to anchor the solutions, developing a gap analysis, and identifying and harmonising a set of thematic regulatory and industry expectations from global regulators, industry guidance or standards, and global discussions across the bank’s key jurisdictions.
There is no standard market practice for a target operating model (TOM) design to manage these new risks – instead, banks have created tactical, informal solutions to manage risk on reactive basis. EY conducted analysis of the approach that peers were taking, identifying latest trends and leading market practice. We then worked with the bank to agree appropriate RACI to manage the risk, with clear divisions of responsibility. This approach is helping the bank to integrate sustainability risk to their operations across global markets, lines of business and lines of defence.
The thought leadership generated is at the forefront of this rapidly evolving issue, with EY supporting other banks in creating solutions that allow them to deliver ambitious sustainability agendas, confident that new sustainability-related risks were managed effectively. EY presented this thought leadership at the United Nations Environmental Programme Finance Initiative – an event attended by senior representatives of over 50 global banks.
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