State Bank of India on the hunt for risk management consultants

Source: Consultancy 2020-07-07

The State Bank of India (SBI) is moving to transform its risk management vertical, and has put out a request for proposal (RFP) to the consulting industry for support. The project is expected to extend over five years.

Jolted by the Covid-19 crisis, SBI joins organisations across India and the world that are shoring up their risk management profile. As India’s largest lending body, SBI is looking to enhance all areas of its risk management infrastructure, ranging from basic enterprise and credit risk to stress testing.

The bank is also expanding its scope to more modern and unprecedented forms of risk. Pandemic risk is a one example, while SBI is also looking to shore itself up against climate change risk. The bank has made the decision to bring a panel of external consultants on board for this entire overhaul process, which is expected to take up to half a decade for planning and implementation.

Reports suggests that SBI chose to go with external consultants due to the fact that the unprecedented nature of the Covid-19 crisis has left the bank’s internal mechanisms overwhelmed, insufficient and in some cases irrelevant. Consulting firms have broad expertise derived by helping other businesses overcome similar challenges.

The five-year time & material contract will demand a number of man-hours from the consulting firms, with expectations of a multifaceted team that can offer support in a variety of functional areas. The external team will be expected to manage the entire risk portfolio, ranging from improve credit risk and stress testing to climate and pandemic risks.

No doubt, the pandemic and its adverse financial impacts have given impetus to risk management at SBI. The Reserve Bank of India (RBI) will hope that SBI’s new initiative sets an example for the rest of India’s banking sector, where risk management remains relatively immature.

RBI has been calling for greater risk focus since 2017, when it mandated the appointment of a Chief Risk Officer who reports directly to senior leadership. India’s banking sector was already in need of a comprehensive overhaul owing to a build up of a heavy non-performing asset (NPA) load.

SBI called upon external consulting support back in 2017 as well to manage insolvency proceedings and lighten its NPA burden. Now, the bank is looking to shore up its risk management profile, hoping that other banks will follow suit.

SBI

risk management

State Bank of India on the hunt for risk management consultants

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