“There is a need to think afresh about risk and uncertainty and how to keep pace with change” – Deputy Governor Ed Sibley

• Lessons need to be learned from the pandemic – changing how we think about risks and probabilities over the longer term
• Boards and senior leaders must act now to deal with change from technology and climate change
• Understanding the changing environment and having effective governance and risk management is critical to managing the complexity involved and keeping pace with change

Central Bank of Ireland Deputy Governor Ed Sibley today (18 November 2021) spoke at The Association of Compliance Officers in Ireland (ACOI) 20th Anniversary Conference. Deputy Governor, Ed Sibley, highlighted the disruption that is taking place across financial services and how important effective governance and risk management is in managing the associated risks.

Deputy Governor Sibley said “the level of change and the associated uncertainty presents real challenges for boards and senior management. They need to have sufficient understanding of the breadth of the changes and their implications and gain assurance that there is sufficient depth of expertise within the organisation to take advantage of the opportunities and manage the associated risks.”

In his remarks, the Deputy Governor highlighted the need for better consideration of risk over a longer time horizon. He noted that the probabilities of a sustained operational outage, a serious cybercrime incident, or a severe climate related event may be relatively low in a given year, but when looking over a longer term horizon, that probability increasingly comes closer to a certainty.

He also noted that “while incumbent firms have significant challenges in adapting business models and IT capabilities, it is also important that technology-driven firms recognise that they need appropriate governance and risk management arrangements and demonstrate appropriate cultures that sustainably deliver for their customers and maintain trust in the financial system.”

In relation to the climate crisis, Deputy Governor Sibley called on boards and executives to act now “in order to mitigate the risk and adequately position themselves to respond to these challenges, opportunities and regulatory expectations, firms will need to understand the impact of climate related risks on their business environment, their business models and investments.”

Mr Sibley concluded that “For boards and senior leaders to recognise and deal with complex issues that we face, they must have a breadth and depth in their understanding of the issues, the complexity involved and what is required to keep pace with change to maintain sustainable models and effectively manage the risks. They cannot do this alone, and will require the support of and challenge from compliance, risk and audit functions.”

Deputy Governor Sibley’s full address can be read here