In the latest episode of the ‘Ganado Meets Finance’ podcast, Joyce Grech, head of commercial banking and member of the executive committee of HSBC Malta, talks on a range of topics including risks and challenges faced by banks, the current environment for Maltese corporates, sustainability and ESG, as well as female participation in senior positions.
Joyce Grech has held various roles at HSBC Malta over the years, culminating in two important ones, that of chief risk officer and her current role as head of commercial banking. Despite working within the same organisation, Grech says she has had the opportunity to grow and experience banking from different perspectives.
In the latest ‘Ganado Meets Finance’ podcast, she discusses the role of risk managers within banks and other financial institutions which she says has changed dramatically in line with the broadening of the risk taxonomy and risk becoming an enterprise-wide concept.
Grech describes how risks within banks evolved from typically being labelled only as “credit risk” or “market risk”. Today’s risk managers need to adapt to and appreciate the breadth of the risks of the institution, look beyond the present and be also subject-matter specialists. The focus of the risk unit within the organisation “can literally change from one day to the next”.
Grech emphasises how identifying and understanding one’s risks provides opportunities to manage and improve one’s chances of success. The everchanging regulatory environment, people risk resources, cyber-security risk and climate-change risk are among the most notable risks faced by banks, she says. Although it may not be immediately evident, she argues, climate-change risk impacts banks in other areas such as credit risk, reputation risk and business continuity. Nonetheless, Grech believes that in every risk there are also opportunities.
Grech also speaks about being employed in a customer-oriented role versus being involved within the risk function which, at face value, may appear to be two roles on different ends of the spectrum. Within the risk sector, the challenge is keeping the customer in mind when setting the risk appetite and in taking decisions as to how to mitigate against the relative risks.
She describes what she considers to be the primary challenges faced by Maltese businesses within the current complex environment, particularly those caused by the lingering effects of the pandemic and the war in Ukraine. She notes how disruptions in supply chains, increases in prices and reduction in capacities have induced businesses to revisit their business models to address, among others, the impact on cash flows, working capital requirements and trade cycles. Having an element of contingency inbuilt into processes and being agile are key, she says.
She adds that against a background of regulatory demands which banks may have to pass on to their customers, the role of a bank is to − as far as possible − facilitate processes for their customers particularly, through technology. One area she mentions that adds further pressure on both banks and customers is regulatory reporting relating to ESG. Banks have duties to report exposures and they need to obtain certain information from their customers.
Grech then discusses the issue of sustainability and recognises that the attitudes and the level of preparedness towards this challenge differ from one business to another, something which is also evident worldwide.
She says it is critical for businesses to look beyond short- to medium-term gains as sustainability will catch up with everyone and will result in pressures from consumers, suppliers, regulators and governments. She notes that banks have a role to play not only by assisting customers in transitioning to green sources of energy or in customers’ sustainability initiatives through products, solutions, knowledge and expertise sharing, but also in raising awareness on the risks if action in this field continues being postponed.
Ultimately, the future growth of banks will also be in part impacted by their ability to support and encourage sustainability-related business strategies, Grech says.
The final part of the podcast touches upon female participation in the boardroom or at senior management levels. Grech gives her views on the level of local participation by women in senior roles and considers that banks should be at the forefront of this area, not only because regulators are focusing on diversity in its various facets but also because of the real benefits which diversity can bring to an organisation.
Catherine Formosa is a senior associate at Ganado Advocates.