Mr. Bernard, you are a lecturer at ISFB, where you have been teaching Risk Management, Internal Control Systems and Target Operating Models for many years. What is your professional and academic background?

I began my career in IT after graduating from EPFL with a degree in systems analysis and operations research. I quickly turned my attention to process optimization in the banking sector, and after a spell as a manager in large firms, I joined a private bank in Geneva as a member of management, in charge of the "Organization & Methods" department.

Since 1992, I have set up several consulting companies, including BERYL Management, which I managed between 1999 and 2019. I worked as a "trusty advisor" to General Management and Boards of Directors in almost a hundred establishments, raising their awareness of risk management. This also enabled me to step outside the purely Swiss context by carrying out consultancy assignments in international financial institutions with substantially different regulations, but observing great similarities with our own concepts.

Then, after selling my company to a French group, I was able to carry out a project that was close to my heart, as co-founder of OPCIS: to provide Swiss banks in categories 3, 4 and 5 with benchmarks and software incorporating a methodology as well as a complete risk management and control system enabling them to keep pace with the latest regulatory developments. On an academic level, I have taught banking organization at a number of institutions, including HEGs, as a lecturer or expert for Masters courses, and led a number of professional training seminars on operational risk and control management for Chief Risk Officers. I am currently an independent director, member of the Board of Directors of Banque Cantonale de Genève and Chairman of the Board's Risk and Strategy Committee.

What are the major challenges facing banking risk today?

In today's particularly complex, volatile, ambiguous and uncertain environment, a predictive view of risks over the long and even medium term remains difficult. However, it remains necessary in order to develop the strategic foundations that will drive the business and ensure the resilience of our banks. And what can we say about the geopolitical environment, which can suddenly influence supply chains and impose sanctions and embargoes?

We also note that many risks are becoming interdependent (traditional financial risks such as credit, market and liquidity risks are subject to significant variations, as are operational and compliance risks). Stress tests now need to take all these interdependencies into account.

Risk management is becoming increasingly standardized. For example, FINMA communication 05/2023 indirectly ... but strongly ... recommends that we strengthen the management of money laundering risks (compliance risks), based on the approaches used for operational risk management (FINMA 2023/01).

Another observation is that no one is now supposed to be unaware of the need to pursue numerous efforts in the climate field, and to demonstrate their ability to better manage ESG (Environmental, Social and Governance) criteria more globally. Here too, there are numerous risks, such as green washing, green bashing and so on. In addition, the exponential growth in cyber-attacks is now a fact of everyday life, but the influence of social networks and the use of AI (artificial intelligence) are also becoming threat vectors with strong impacts on business.

At director level: How can we better understand risk-related issues? How can they take a stand? How can we make informed judgments about the relevance of the executive's approach to risk? How can we use these approaches to integrate them into the right strategic impulses? This is where a dedicated training course for bank directors comes in.

You are a lecturer in the new ISFB Certificate in Risk Management for Directors. What topics do you cover, and what profiles do you expect to come across in the course?

All the topics we've just mentioned will be covered, because a broad vision is necessary for any Administrator.

In the context of risk management, the Board traditionally has an obligation to ensure that the means and approaches implemented by the executive are correct and in line with requirements (FINMA 2017/01 cm10,14). We need to go beyond this assurance on the quality of the systems and resources implemented, and integrate risk management into the development of strategy by setting out the company's risk appetite in an informed manner.

It has become essential to provide administrators with the codes they need to take this broad view, because :

• Risk 0, which could reassure administrators, has never existed, and aiming too hard for risk 0 is certainly anti-productive in terms of business and remains a utopia (no business without risk).
• Since de facto 0 risk doesn't exist, and business can't be conducted without risk, it's better to manage it than suffer from it.
• Risk monitoring based on overly synthetic information can hide the "real" risk. The ability to ask the right questions with a drill-down approach is becoming more and more necessary, and should be accessible to Directors.

An "enlightened" understanding of this "risk" issue therefore requires a minimum of method and, above all, very pragmatic reference points based on practical examples.

Until now, two subjects have traditionally been rather confusing for non-banking bank directors: ALM (Asset Liability Management) and risk management. The training offered by ISFB clearly meets the latter's needs in terms of risk management.

Giving " the tone at the top " is very useful, because raising awareness of risks and controls among all the players in the various lines is still very much a topical issue, and will require a great deal of effort.

Although AI will gradually revolutionize processes and eliminate simplistic Taylorism once and for all, it will never replace the highly subjective decision to take a risk in order to seize an opportunity.

This will be the key issue for the Board of Directors when setting its risk appetite.

Jean-Philippe Bernard

ISFB Program Director, and ISFB Lecturer