CLIENT CASE STUDY


Large Australian Bank: Risk management strategy

Accenture’s Risk Management service line helped an Australian bank develop a risk management strategy that positioned it well during the recent downturn.

Overview

This large Australian bank, which also has businesses outside of its home country, is one of the world’s leading financial institutions in terms of market capitalization.

Opportunity
Its Business Banking division, like all parts of the banking sector, was under constant pressure to improve customer service, streamline processes and costs, cross-sell more effectively, use technology more innovatively and improve its distribution channels. However, the bank also realized that its strategies to achieve high performance must be founded on sound, economically sustainable risk management.

The bank set itself the target of improving the performance of three elements of its risk capability by 20 percent. These three elements were risk effectiveness, risk efficiency and employee engagement. In this way, the bank would not only improve its overall competitiveness, but improve its standing with investors and regulators. Needing help to clarify the strategy, design its operating model and prioritize actions, the Business Banking division turned to Accenture, which had recently completed a two-year finance transformation program for the bank.

Solution

Working closely with the client, a four-member team from the Accenture Risk Management service line was able to leverage work done on the recently completed finance transformation project to shorten the project to four weeks. Accenture’s credit risk and operational models also played an important role in the project, helping to integrate leading practices into the process. In the first week, the team agreed on the current level of risk management capability, while issues were identified and prioritized in the second week. At the same time, the guiding principles were agreed on. The risk management operating model was defined in the third week, and the future level of risk management capability in the fourth. The detailed design mapped specific services or capabilities to staffing requirements, using the bank’s own activity-based costing analysis. Accenture also helped to explore various sourcing/delivery models for risk management, including the outsourcing and offshoring of certain processes (among them risk reporting and administration for credit decision making).

Results

At the conclusion of the project, the bank had a clear view of its desired risk management model and was in a position to run a pilot project in one of its geographic regions. The pilot demonstrated that it would now be possible to improve the effectiveness of its risk management operations while reducing costs.

The new risk management model has proved its worth by helping the bank to realign its operations during the current economic crisis, thus helping to protect its high credit rating. The model will also assist in protecting shareholder value and maintaining shareholder confidence during this period. This long-term approach is a characteristic of high-performance businesses generally. Accenture research has shown that high-performance businesses continue to manage for value through economic downturns in this way, emerging stronger than ever when conditions improve.

Industry & topics highlighted

Financial Services