ERM in Banking & Finance with Eleni Willis

Welcome to RIMScast. Your host is Justin Smulison, Business Content Manager at RIMS, the Risk and Insurance Management Society.

 

Today’s guest is Eleni Willis. The Senior Vice President and Director of Enterprise Risk Management, Eleni Willis leads the design and implementation of Sterling Bank and Trust’s Enterprise Risk Management program. An early adopter of technology to support her GRC strategy, Eleni and her team apply common ERM methods and approaches to manage risk across all first and second lines of business. In this interview, Eleni and Justin discuss the roles of ERM in preventing a crisis such as the bank run on SVB, how her background as a bank examiner informs how she presents to the board on risk, and what will change for the future of ERM in banks in the light of SVB’s closure.

 

Key Takeaways:

[:01] About RIMScast.

[:28] Today’s guest is Eleni Willis, the Enterprise Risk Manager at Sterling Bank.

[:35] All about upcoming RIMS webinars, workshops, events, and more!

[1:17] About RIMS-CRMP.

[1:30] About RIMS-CRMP-FED.

[2:05] Announcement of the Spencer Educational Foundation and Spencer’s Course Development grant awarded to Temple University in March 2023.

[2:42] About RISKWORLD 2023 with closing keynote speaker Danica Patrick!

[3:19] About today’s episode with Eleni Willis, the ERM Director at Sterling Bank and Trust.

[3:53] Justin welcomes Eleni Willis to RIMScast!

[4:09] Eleni is the Director of Enterprise Risk Management with Sterling Bank and Trust, a small, community-sized bank based in Michigan, primarily doing banking in California.

[4:26] Eleni has been in risk management for 20 years, starting as a bank examiner for the state of Washington during the Great Recession.

[4:52] After regulation, Eleni moved to the banking world. Since then, her career has been a mix between accounting, tax, and risk management.

[5:05] For the last six years, Eleni has been tasked with building ERM programs at different financial institutions and offering risk management consulting and advice within the organizations to move the risk posture forward within the institutions.

[5:38] Justin became aware of Eleni when she was a webinar panelist from Sterling. Justin was a customer of Sterling and thought it would be good to have Eleni on the show.

[6:40] Eleni’s ERM philosophy is there is no replacement for traditional risk management practices: conservative credit administration, liquidity stress-testing, and diversification across the balance sheet.

[7:27] About Eleni’s team at Sterling. As a small team, they wear a lot of hats, including overseeing the GRC platform with Resolver, a big program they are wrapping up shortly.

[8:15] It’s been a long process because of the volume of risk disciplines they are putting into the system, across the second and third lines of defense. Internal audit also utilizes the system. Eleni tells how Sterling’s first line is starting to use the GRC platform.

[8:54] The GRC platform has replaced three other systems so far, saving a lot of money.

[9:08] It’s been a lot of work but the tone of the top has been to implement a robust risk management program, which has been a strategic initiative for the last couple of years.

[10:01] Justin and Eleni discuss the SVB collapse in terms of risk reduction. First Citizen has brought most of the assets of SVB. Bank leaders want to make sure they are prepared and that they have business continuity planning.

[11:02] Social media fueled the bank run at SVB. Sterling is asking how susceptible are they to a run. How can the bank mitigate widespread misinformation? Do the Instant Response Plans incorporate this kind of scenario?

[12:04] Eleni foresees regulatory investigation into banks to avoid repeating such a run. Eleni explains why so many accounts exceeded the $250K ceiling that the FDIC guarantees. SVB’s asset/liability mix should have been a warning.

[13:26] Sterling has been asking themselves what their liquidity function looks like. Do they have a solid 30-day stress liquidity metric in place?

[14:05] Eleni shares a football analogy about SVB not having a Risk Manager. A bank without a risk manager is like a football team without a left tackle. The left tackle protects the quarterback’s blind side.

[15:10] About the importance of a risk professional. Success is averting danger. It’s not glamorous. It’s when the job is not done well that everyone starts paying attention.

[16:21] About the challenges of dealing with misinformation and risks to reputation. It’s very hard to get everyone to pay attention.

[17:35] RIMS plug time! Sponsor a weekly or dedicated episode of RIMScast! Contact us at pd@rims.org. Register for RISKWORLD 2023, and workshops before RISKWORLD.

[18:40] Justin revisits his interview with Johnny C. Taylor Jr., President and CEO of SHRM, about what Johnny has in store during his opening keynote at RISKWORLD. It relates to COVID-19!
[20:28] About awards and additional RISKWORLD keynotes, including Danica Patrick!

[21:09] How Eleni handles the increased attention on banking and risk management. Sterling worked to curb fear. A loss of faith causes a bank run. Banks are a business of buying and selling money. The banks need to educate the customer on how that business model works. That education falls, in part, to the risk manager.

[24:14] It’s about communication. Eleni believes regulators will expect banks to communicate more on their liquidity posture. Eleni recently reported to her board on the bank’s liquidity risk. They wanted to know the action plan and were asking a lot more questions.

[26:17] Eleni communicates to the board with a mix of narrative and numbers. It’s an art to know what numbers you do have to pull up and when you should put them up. She also has to interpret the numbers to the board in layman’s terms. If the board doesn’t understand the risks, it will be hard for them to fulfill their fiduciary responsibilities.

[28:06] How long Eleni works on a board presentation. She has it down now to two weeks to gather the data and a few more days to edit it for presentation. She relies on her background as a bank examiner.

[29:32] If what’s left of SVB placed an ad for a Risk Manager, would Eleni apply? She talks about how Wells Fargo built up their risk management.

[30:35] Eleni is interested to see whether other banks will start to build out their ERM departments. Eleni’s contractor remodeling her home knows what Eleni does. Risk Manager is becoming a household term.

[31:29] Early in Eleni’s career as a risk manager, people had questions about it. “What you talking about, Willis?”

[32:10] Justin thanks Eleni for being on the show.

[32:17] Special thanks to Eleni Willis of Sterling Bank. Her written ERM Q&A interview was produced by the Strategic and Enterprise Risk Management Center and is exclusively available now for RIMS members through the RIMS app. RIMS members, go to the app store and download the RIMS app! It will appear on RIMS.org in April 2023.

[32:47] Watch the 2022 Webinar “From Chaos to Clarity,” sponsored by Resolver, linked in these show notes. Sponsor a RIMScast episode to reach a global audience! Justin shares other RIMS offers, including a transitional membership!

 

Mentioned in this Episode:

RISKWORLD 2023 — April 30‒May 3 in Atlanta, Georgia! Public registration is open!

Riskworld: In-Person Workshops April 29‒30 | Save 30% on pre-conference workshops when you register to attend RISKWORLD!

RIMS-CRMP Exam Prep Course — In-Person at Riskworld, April 29-30! Register by April 21.

RIMS-CRMP-FED Virtual Prep Course — May 8-10, 2023 | Register by May 1.

All About The Numbers: ERM Q&A with Eleni Willis (RIMS App Exclusive)

“From Chaos to Clarity GRC Trends for 2023 — Sponsored by Resolver — On-Demand webinar” (featuring Eleni Willis)

RIMS Diversity Equity & Inclusion page

Spencer Educational Foundation

Contribute to Risk Management Magazine

Upcoming Webinars:

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See the full calendar of RIMS Virtual Workshops

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Follow up with Our Guest:

Eleni Willis

SVP, Director of ERM Operations

Sterling Bank and Trust

 

Tweetables (For Social Media Use):

 

“My ERM philosophy is, at the end of the day, there is no replacement for traditional risk management practices: … conservative credit administration, … liquidity stress-testing, and … perhaps even above all, is diversification across the balance sheet.” — Eleni Willis

 

“What happened with the bank was that it was a true classic bank run, and it was fueled by social media..” — Eleni Willis

 

“A bank without a risk manager is like a football team without a left tackle..” — Eleni Willis

 

“This is an essential function for any financial institution. … An effective risk manager is essentially a human safeguard against calamity. They need to provide blunt feedback and what’s most important is that they have to be able to get their bosses to listen.” — Eleni Willis

 

“I had someone tell me ‘I’d rather gnaw off my right arm than do what you do for a living.’” — Eleni Willis