Banks play an important role in modern economies: looking after people’s money, facilitating transactions, and providing credit that gives economies momentum but which can also impart volatility—e.g. when too rapid credit growth inflates housing or commercial property bubbles. Banks are the major source of money creation in the economy, through the extension of credit (see the Bank of England article Money creation in the modern economy). Ultimately the central bank, e.g. the Reserve Bank of Australia, can influence the rate of money growth through monetary policy, but that is an imperfect instrument, and there is plenty of scope for short-run instability caused by any poor lending practices by banks. That is why sound risk management by banks and also prudential regulation by APRA are so important. In the first instance, it is the responsibility of banking executives to ensure their banks’ lending activities (and related borrowings to fund part of that lending) are sound and that banks are not taking on too much risk.
One banking executive who appears to be at the vanguard of managing risk in the banking sector is Peter Deans, Chief Risk Officer at the Bank of Queensland. On Thursday 11 February, Peter Deans will give a lunchtime presentation on Current Issues in Risk Management in Financial Services to the Economic Society of Australia (Qld), of which I am the current Secretary. There will be a small charge for attendance to help cover costs. If you are interested in attending, could you please register your interest with the ESA (Qld) Secretariat (email@example.com).
Peter Deans, Bank of Queensland
I have learned that the issues Peter Deans will cover in his presentation include:
- the evolution of risk management post-GFC,
- the role of the Chief Risk Officer in non-financial risk management,
- risk culture, and
- the impact of new technologies, data analytics and disrupters.