From Threats to Tools: Evolving Risk Functions in Financial Institutions

From Threats to Tools: Evolving Risk Functions in Financial Institutions
January 15, 2026 6 mins

From Threats to Tools: Evolving Risk Functions in Financial Institutions

From Threats to Tools: Evolving Risk Functions in Financial Institutions

The risk management playbook is being rewritten as financial institutions navigate an era of heightened complexity and rapid change.

Key Takeaways
  1. Risk functions must evolve from defensive to strategic partners, driving collaboration across business units and boards to enable resilience and growth.
  2. Agility and continuous education at board level are essential for anticipating and adapting to today’s accelerated risk landscape.
  3. Digital transformation and third-party reliance demand robust cyber risk management and advanced modeling to safeguard operations.

The New Risk Landscape: Convergence, Complexity, and Acceleration

Financial institutions are operating in a risk environment marked by speed, complexity and interconnectedness. A convergence of challenges, marked by regulatory demands, technological advancement, cyber escalation and shifting geopolitics, is creating a landscape defined by volatility. Meanwhile, the rapid acceleration of digitalization has meant that financial organizations are increasingly dependent on technology and third-party providers, introducing new exposures related to data privacy, business continuity and operational resilience. In parallel, institutions must also address the heightened expectations of stakeholders and regulators around transparency, sustainability and long-term risk mitigation.

Recent findings from Aon’s Global Risk Management Survey (GRMS) confirm this shifting terrain: Risks like cyber-attacks, regulatory changes and climate-driven events dominate boardroom agendas. Yet notably, only 14% of respondents were actively modeling the top 10 risks identified in the survey, revealing a concerning gap between recognition and action. In this time of heightened uncertainty, the imperative for organizations is clear: Risk management functions must evolve to become strategic assets as they form closer partnerships across the business.

Board-Level Agility and Education: A Strategic Imperative

Boards must prioritize agility and continuous education as foundational elements of effective oversight in today’s rapidly evolving environment.

Board-Level Priorities for Effective Risk Oversight:
  1. Embrace Agility: Replace static risk registers with dynamic dashboards.
  2. Foster Continuous Learning: Actively embed new insights and education into every meeting.
  3. Integrate Education with Oversight: Ensure board knowledge remains current and relevant.
  4. Adapt Swiftly: Respond proactively to emerging challenges and opportunities.

As the complexity and interconnectedness of risks increase, it becomes vital for leaders to access a single, comprehensive view of risk that is continually refreshed and truly reflective of the institution’s exposures. Board meetings must become forums for generative conversations, creativity and proactive risk management. The need for a unified, dynamic view is driving boards to incorporate technology tools into their processes – particularly as artificial intelligence (AI) emerges as a tool to draw together threads from cyber, compliance, market, operational and other domains into one cohesive dashboard.

14%

Only 14% of financial institutions actively model their top risks – leaving a major gap between risk awareness and action.

Source: Aon’s 2025 Global Risk Management Survey

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Boards today face a convergence of risks at unprecedented speed. Our responsibility is to educate ourselves, stay agile and ensure dynamic oversight to make good decisions in a high-velocity environment.

Ramatoulaye Adama Diallo
Board Director & Operating Partner, Financial Services, Fintech, Telecoms & Digital Infrastructure

Ultimately, boards that cultivate agility, regular learning and a holistic approach to risk are better equipped to drive strategic choices, foster resilience and capitalize on opportunities amidst persistent uncertainty. This evolution in board practice supports not only effective oversight, but also a culture of continuous improvement and organizational strength.

Risk Functions: Moving From Static to Strategic

The focus for financial institutions is shifting from traditional, siloed risk management methods to agile, business-integrated functions that can keep pace with rapid changes in technology, regulation and external threats. Transformation is not limited to new risk domains; traditional areas such as credit are being significantly enhanced as risk analytics becomes increasingly embedded. With automation and deeper analytics, processes like credit assessment are now faster, more transparent and safer, making it possible to streamline and optimize decisions in a manner that was previously unattainable.

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Agility is one of the key words. Risk functions must transform alongside the business, becoming more strategic and interconnected, especially as digitalization and third-party reliance accelerate.

Giulio Mignola
Head of Credit, Operational and Enterprise Risk, Intesa Sanpaolo

A central theme in this evolution is the growing partnership between risk management and the business itself. Risk functions are collaborating more dynamically with their business counterparts, applying advanced techniques like scenario analysis and “what if” simulation — tools that were historically reserved for non-financial risk domains. These qualitative approaches are now essential for anticipating exposures that lack robust data histories or are so new that traditional modeling is insufficient. As a result, risk teams and business lines are jointly navigating evolving threats, ensuring strategic decisions are informed by both quantitative insights and forward-looking scenarios.

Insurance as a Catalyst for Resilience and Innovation

Insurance plays a pivotal role as financial institutions navigate a growing spectrum of converging risks. With the mounting complexity introduced by digital transformation, cyber threats, regulatory changes and environmental unpredictability, organizations are enhancing their risk management frameworks by seeking robust and adaptive insurance solutions. The disruption driven by technological advancement and new business models means that effective insurance now extends well beyond traditional coverage, encompassing everything from operational risks to data privacy and intangible asset exposures.

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We see increased demand for broader, tailored insurance solutions and greater collaboration with clients. To provide the right capacity, we need to understand risks better and reward those who invest in resilience.

Luca Ravazzolo
Head of Financial Institutions Underwriting, Zurich Insurance

In this challenging context, financial institutions are looking to insurance partners for broader and more innovative policy solutions. There is a noticeable shift toward securing policies that address gaps found in traditional covers — such as clarifying coverage terms, providing protection for new and emerging risks and developing products that can respond to novel types of claims and losses. Demand for higher capacity is also rising, particularly for risks associated with adverse weather, climate change and exposures that affect assets like lending portfolios. These evolving needs reflect a market where risks are accelerating in both frequency and impact, requiring more adaptive and forward-looking insurance options.

At the same time, financial institutions are becoming more strategic about how they manage and retain risk internally. Increasingly, organizations are turning to capital optimization tools and the use of captives to retain a greater portion of their risk, especially for exposures that are new, complex or difficult to insure through conventional markets. By leveraging captives, institutions gain more control and flexibility over their risk financing arrangements, enabling them to address unique exposures and build stronger resilience from within. This blend of innovative insurance strategies and internal risk retention empowers organizations to meet heightened regulatory expectations, respond effectively to emerging threats and build long-term stability.

Charting a Course from Threats to Tools

For financial institutions, the evolution of risk management means shifting from a reactive approach to one that actively supports growth, innovation, and resilience.

Four Actions to Transform Risk Management:
  1. Integrate agile risk practices across the organization
  2. Leverage advanced analytics for informed decision making
  3. Develop collaborative strategies to enable resilience and growth
  4. Anticipate and address complex risk challenges proactively
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The future of risk management lies in transforming threats into tools for resilience and innovation.

Daniel Butler
Head of Financial Institutions EMEA, Aon
Thought Leaders
  • Daniel Butler
    Head of Financial Institutions EMEA, Aon
  • Ramatoulaye Adama Diallo
    Board Director & Operating Partner, Financial Services, Fintech, Telecoms & Digital Infrastructure
  • Giulio Mignola
    Head of Credit, Operational and Enterprise Risk, Intesa Sanpaolo
  • Luca Ravazzolo
    Head of Financial Institutions Underwriting, Zurich Insurance

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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