It’s going to be risky, get over it!

There is risk inherent in every project. Bank transformation is no different and, when all things are considered, it could probably be considered a little more risky than your run of the mill enterprise project.

Banks by nature are risk adverse. They have whole departments dedicated to the management of risk within their enterprise. Algorithms are developed, analysis is done, pricing is adjusted, and security policies are implemented, all in the hopes of mitigating risk of default, defalcation, and theft. It is probably surprising to learn that these same banks are often eager to ignore the risks associated with transformation projects or eager to pass the risk off on to new partners.

Risk management in banking transformations must be owned by the bank. The bank should not try to lay the project risks off on to a vendor, solution integrator, third party management company, methodology, or industry trend. The bank should not pretend that the business case that generated the transformation is bullet proof, or that all of the work, assumptions, plans, schedules, and budgets are untouchable and should not be questioned. The bank should not dismiss identified risks or take the identification of risks as a challenge to their knowledge, abilities, or skills.

Many banks will, in the midst of a banking transformation, adopt a management by crisis mentality. They are comfortable taking on the issues as they come, ignoring the warning signs and only dealing with issues as they are confronted. In some cases this is done out of necessity as the size of the team and the scope of the transformation is so out of synch that the bank’s management team only has time to deal with what is in front of them.

A bank serious about a truly successful transformation program will adopt a mentality and foster a culture of management by risk. Once identified risks will be avoided, mitigated, or accepted. This is accomplished through conscious action and leadership by the bank’s transformation executives. In the end success or failure of the transformation is owned by the bank. Acceptance of this early on and accepting that there will always be risks that need to be managed helps ensure success.

Banks that leverage their vendor, solution integrator, and other third parties to help them identify risks, and define avoidance, and mitigation strategies will be more successful than those that do not. Leveraging the consultants working on your transformation, pulling out their collective experience in banking transformations, and truly taking the time to understand the identified risks to helps a bank make the most of their investment in these consultants and allows the bank to learn through others’ experiences while still leading their own transformations.

If two people were in a car and driving towards a bridge because that was the initial route the driver, who has never crossed the bridge before, selected and the passenger, who had been across the bridge numerous time, told the driver that the bridge was not safe and should be avoided or they should stop and take a look at it before proceeding most people would, in their own best interest, listen. Why does it take a number of failed bridges before most banks start to listen and ask for advice, guidance and the identification of risks?

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