Like every December since 2013--with the exception of the covid-19 years--Luxembourg-based risk management officers have a chance to network and exchange on the challenges and technicalities of regulations at a conference. At the origin of the event are the Luxembourg bankers’ association ABBL’s Gilles Pierre and the Association for Risk Management (ALRiM)’s Thierry López and Luc Neuberg.
It was important to remind that maybe, for banks, outsourcing is important.
This year, outsourcing and ESG were at the forefront of the conference, an evident choice for Pierre. “The importance of outsourcing is not new, but it was important to remind that maybe, for banks, outsourcing is important first because it enables us to have the human resources and specific and specialised skills necessary that we do not have in-house. But there is also an objective of cost-efficiency.”
The CSSF in April published , a document not only providing a framework for outsourcing arrangements, but also addressing information and communication technology (ICT) requirements. “That’s also why it’s on the top of the agenda for regulators: we must avoid situations where a bank will outsource everything and where there would be no more substance in the bank,” said Pierre. The challenge of applying regulation to cross-border scenarios was also discussed at the event.
Sustainability and ESG, an easy choice
ESG, in turn, is a perennial discussion for the conference organisers: “The subject of sustainability and sustainable finance is here to stay so we have to cope with the challenges,” stated Pierre, adding that “[saving the planet] is the ultimate goal. Of course, we need some time--we don’t have a lot of time, but we need some phasing in. We can’t implement everything from the start.”
Reassuringly, “the awareness is now complete among banks and in practice, the senior management and directors of banks have really taken [the topic] on-board,” but in the current stage of the battle--the practical implementation--"we are facing challenges with the data.”
More efforts needed on data procurement
The ABBL member explains: “Risk management frameworks are fuelled by data--we need the data on the degree of sustainability of the counterparts--and we are in the process of collecting the data but the data is somewhat missing at the moment.” Partly to blame is the timing of some regulations put in place, like the
But, while progress needs to be made in the banking sector concerning the access to sufficient data, “we will give our best efforts to incorporate good practices,” says Pierre. “It starts from the top--all this awareness has been made and it is sure that we will never go backwards. There will be an accelerating phase so the regulatory framework is not necessarily stable and harmonised but there are a lot of things coming together.”
Looking ahead to the next end-of-year conference, in December 2023, Pierre reckons that major developments on the EU regulatory front and Basel IV will be on the agenda. As this year has shown, however, the wisest approach would be to expect the unexpected.