Escalating regulatory pressures are driving a structural shift in how financial institutions approach risk management and assurance activities. Many firms are struggling to respond to the heightened expectations of multiple stakeholders as they have emerged from the most severe economic downturn in generations. Among these expectations is the drive captured by the regulatory phrase “Getting To Strong,” or GTS. This term stems from the U.S. Office of the Comptroller of the Currency’s (OCC) expectations for large banks’ risk management practices; but risk management expectations have increased across the industry.
Supervisors are increasingly demanding credit risk be reviewed for quality and to ensure that the company is adhering to its credit risk appetite statement. In common with other risk management disciplines, the emphasis is on the function becoming more forward looking, proactively monitoring emerging risks in real time rather than maintaining a backwards-looking approach to risk management. This paper examines how this forwards-looking approach is enabled by the implementation of continuous risk monitoring program within the credit review function.