An interesting article titled “Regulators Tighten Screws on Enterprise Risk Management at Banks” in FinCriAdvisor this weekend, discusses how FDIC thinks ERM would be a great idea ERM at some small banks.
Apparently, not only do some banks not practice risk management, but some like the Bank of Tacoma (Wash.) also lack strategic plans! Others like the Butler Bank of Lowell, Mass., lack risk exposure plans and some like the Venture Bank of Lacy, Wash., “operate with an inadequate system” to monitor risks.
What! I am worried that some banks still use the ancient abacus to calculate their regulatory capital.
But the real reason that I wanted to write about this article was to rant about this quote: “One difficulty is that risk management often is backward-looking and informed by experience, rather than anticipatory.”
So Riskczar asks, if the author thinks that risk management is backward-looking, then internal audit must be the Mother of All Backward-Looking activities.