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The latest insights for risk management professionals, presented by Risk.net and BCG
New ways to combat rising complexity and costs
BCG's Global ESG, compliance, and risk report explores the answers, highlighting practical measures that companies can take to achieve these goals. In doing so, it draws upon insights from BCG’s global survey of 200 senior risk and compliance executives across industries. We also leverage our experience in implementing efficiency programs and simplifying risk, compliance, and ESG management systems.
GenAI isn’t just a headache for risk and compliance. It’s an enabler
Generative AI is increasingly being adopted in a decentralised fashion by many companies, as individual business units embrace the new technology to perform critical tasks and improve productivity. That poses problems for risk and compliance (R&C) teams as ad hoc implementation may not meet regulatory, privacy, information security, consumer protection, and environmental rules.
For banks, the AI reckoning Is here
Banks must move beyond pilots to redefine strategy, technology, and governance—or risk losing control of the financial landscape to faster movers.
- AI is reshaping competitive advantage in banking. Predictive, generative, and agentic AI are redefining the foundations of scale, efficiency, and customer experience.
- Banks must anchor AI strategy in business strategy. Winning institutions focus on where AI will deliver real returns, not just on deploying more technology.
- Systematic execution will separate leaders from the rest. High-ROI banks prioritise use cases, embed performance metrics, and align capital and leadership behind scalable results.
- Early movers will set the pace—and the terms—of AI competition. Lagging banks will find themselves racing to catch up under conditions they didn’t choose.
A synchronised approach to digital risk
In today’s digital-first world, businesses rely on technology for virtually everything they do. But digital innovations, such as AI, often outpace the measures companies take to safeguard their systems and respond to disruptions.
Many organisations still approach cybersecurity and IT disruptions as isolated technical failures rather than as fundamental business risks. IT teams, cybersecurity experts, and business leaders operate with different goals and processes, work independently of one another, and speak different languages. Incidents like the global CrowdStrike outage in July 2024, which temporarily crippled airlines, banks, and hospitals, are a direct outcome of this disconnect.
The financial opportunity hiding in your balance sheet
Companies that optimise their balance sheet can improve earnings by an average of 5% across industries.
- Three factors are pushing companies to improve their balance sheet: increased spending on GenAI and other technology, higher interest costs, and lingering supply chain issues that push up inventory.
- CFOs face sizable challenges when they take on balance sheet initiatives. To overcome them, they should take a pragmatic approach—starting with their use of working capital and building from there.
- Key success factors include getting the entire C-suite involved in decision making, coordinating with other business units and functions beyond finance, and using technology to automate and standardise reporting and monitoring processes.
Risky times and cost pressure call for innovation in bank compliance
BCG’s 2025 global study finds that top banks are transforming their compliance function into a strategic engine for resilience and growth.
- As costs and demands increase, banks need to align compliance risks with their overall business objectives and risk appetite.
- The key to meeting higher compliance costs is smarter investment in technology and efficiency.
- Banks should optimise their operating models and embed compliance in all processes before investing in advanced technologies. Then they should bring AI and GenAI into core compliance processes.
- The most effective compliance teams of the future will skillfully combine risk and operations expertise with advanced technological capabilities.
Banking on uncertainty: thriving through the tariff storm
Geopolitical risk has become a top priority for bank CEOs, especially following the April 2025 tariff shock.
- This paper focuses on how banks can practically respond to geopolitical shocks that amplify traditional banking risks—credit, market, liquidity, and operational.
- Changing geopolitical dynamics also elevate exposure to cyberattack and sanctions. Banks must bolster digital resilience and integrate monitoring sanctions into risk management systems.
- Banks can utilise methodologies that convert geopolitical scenarios into sector and bank specific impacts and suggest mitigation actions, unlike traditional macro approaches that often fail to deliver actionable managerial choices.
- This helps identify concrete steps such as adjusting treasury and risk practices, enhancing geopolitical intelligence, financing strong clients which are adapting their supply chains, and rebalancing credit portfolios through pricing differentiation, credit insurance, or securitisation.
Three strategies for smarter corporate lending
By standardising and simplifying workflows, integrating advanced technologies, and adopting production steering, banks can boost efficiency, cost savings, and service quality.
- Standardising processes, implementing risk-based fast lanes, simplifying administrative tasks, and reorganising can raise efficiency by up to 30%.
- Integrating advanced technologies improves process efficiency, decision-making capabilities, and the quality of credit products and services.
- Production steering utilises continuous, KPI-driven measurement to quantitatively evaluate and optimise lending workflows.
The future of finance 2025: fit for growth, built for purpose
Despite strong recent performance, global banking continues to face deep structural challenges.
- From a valuation perspective, banking has performed well of late, with 30% total shareholder returns from June 2023 to June 2024. However, a decline in fee income generation, struggles with productivity and scaling, and underutilisation of balance-sheet management as a value driver pose serious challenges to the industry.
- Value is migrating steadily away from banks and toward nonbank financial institutions and digital attacker banks—and in many cases, competitors are generating new revenue pools.
- Agentic AI has the potential to radically change the banking model—but it also contains the seeds of further disruption. Banks must be bold and focused in their adoption of this technology.
- If banks are to play their crucial role in supporting economic growth and prosperity, regulators and policymakers must rethink how the industry is regulated.
Contact the BCG team to learn more