Bank risk manager of the year: RHB Group

Chong Han Hwee, RHB Group When volatility began breaking through the assumptions that had underpinned bank risk management for years, the response of RHB Group’s chief risk officer was not to build another reporting process.It was to accelerate a transformation that had already begun: creating a ‘risk nerve centre’ capable of bringing together information from across the bank, turning it into scenarios and decisions, and increasingly using AI to make the process faster and more granular.Established around two years ago, the nerve-centre model was designed to connect regional and specialist expertise rather than leave risk decisions sitting within individual functions. Information from credit, operations, capital, regional markets and other teams is brought together, processed centrally and fed back into the relevant businesses.This set-up has been put through its paces over the past 12 months, as markets have been buffeted first by the fallout from US-imposed tariffs and then by the eruption of war in the Middle East.“Two years ago, without much volatility, the typical credit business was still centred on straightforward lending, with less focus on market volatility,” says Chong Han Hwee, chief risk officer of the group. “Today, the nerve centres allow us to look at the impact of different events, run different scenarios and make decisions much more quickly.” Given the current levels of volatility, “turnaround time can’t be compromised”, says Chong.The nerve centresThe motivation for setting up the nerve centres two years ago was to create a mechanism through which regional intelligence and specialist expertise could be brought together to form a coherent view of risk.The idea was to enable faster and more informed decision-making across the bank. Rather than having risk issues assessed in isolation, the centres gave the bank a way to identify common themes across markets and assess how emerging risks could affect different parts of the business.That earlier work has also provided a foundation for assessing newer shocks. When the US-Iran conflict emerged, the team was able to build on its existing tariff analysis and consider how the different risks might interact, rather than starting from scratch.The nerve centres also help keep decisions relevant as conditions change.When US president Donald Trump announced sweeping new import tariffs, the bank set aside an additional expected credit loss (ECL) provision to reflect their potential impact. Today, this provision remains largely unchanged, suggesting that the original risk assessment has held up.“The harnessing of all this information flow into a single point of truth enables us not just to see things from a single perspective, but to sit back and analyse multiple events together. That is when our nerve centres become very powerful,” says Chong.The AI elementThey become even more when AI comes to the fore – which is something that Chong and his team have been working diligently on this year. Chong, however, chooses not to describe AI adoption as a competitive advantage. Rather, he says, it is now a necessity.This means embedding AI into the mechanics of risk management rather than treating it as a standalone technology project.The bank is already using it to scan market developments, cross-check analysis and test information against regulatory requirements.A mortgage pilot now seeks to take this approach further. The aim is to use AI across the entire process, from application and assessment through to decision-making and disbursement.A mortgage disbursement can involve more than 40 documents, spanning different languages, measurements and naming conventions.AI can process that information and help create what Chong describes as a “single set of the truth”, reducing the need for people to repeatedly input and reconcile the same data. The role of the human then shifts from processing information to validating it, challenging the output and applying judgement.There is some concern within the organisation about how much AI systems cost to set up and run, so part of Chong’s role is to make sure that the benefits justify the initial investment.“I believe we can break through this and, once the commercial element is settled, this can be rolled out across every product on the retail side,” says Chong.Retail SMEs are a particularly good case study because of the vast amount of data they generate, he says.Ultimately, Chong envisions an integrated system that could eliminate the need for a traditional loan origination system: why maintain a separate platform if the information and functionality already sit within the bank’s integrated system?How fast this happens, however, depends on how effectively the costs are balanced with the benefits. 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