Risk management and the role of a risk manager in organisations are gaining prominence after every crisis, according to BNY Mellon’s Senior Executive Vice-President and Chief Risk Officer Senthil Kumar. 

Kumar oversees the credit, operational, and market risks of BNY Mellon, which has over $43 trillion of assets under custody, and $2 trillion of assets under management across 35 countries. 

“Risk management has gone through a certain evolution. When I joined banking, I don’t think risk played a significant role. But post the global financial crisis (2007-08), when many banks went down, organisations have realised the importance of risk management,” Kumar said. 

“As crisis after crisis came, the role of risk officers has dramatically changed and risk management has reached a level of authority within organisations and risk managers have gained direct independence to report to the top management,” he added. 

A banking industry veteran, Kumar held a number of risk and business leadership positions at Citibank before joining BNY Mellon. He was the Chief Risk Officer of Institutional Clients Group at Citibank, covering markets and securities business, corporate and investment banking, private banking, as well as treasury and trade business.

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Part of Global Systemically Important Banks (G-SIBs), BNY Mellon processes over $10 trillion worth of daily transactions, touching about 20 per cent of global assets in one form or the other. 

“With 20 per cent of global transactions, if we go down, it will impact the entire financial market. Hence, it is important to have a strong and resilient risk management process in place,” Kumar said. 

He added that the bank has put in place a holistic risk management process, which includes a strong risk culture, clear risk ownership, and consistent and comprehensive challenge processes.

Intelligent risk-taking

“As a bank, we are focused on intelligent risk-taking, which means you fully understand the risk. Secondly, you are able to measure the risk; and when you take a risk there is always a possibility that it can go wrong, so you need to understand how to manage the risk; and the fourth element is to manage risks for best outcomes possible,” he added. 

Highlighting the role of technology in risk management, Kumar said BNY Mellon has tools that give risk managers and credit officers real-time information and early warning systems about things that are going wrong.

“We are also looking at bringing in machine learning and predictive tools to most of our processes,” he added.