Extreme risk planning ''a priority strategy for banks''

Banks across the world are putting their efforts into planning for a series of scenarios that would pose an extreme risk to their operations, according to new research.

According to the study by KPMG and the Operational Riskdata eXchange Association, this scenario analysis is being employed by the sector as part of its protective planning.

People with risk jobs in Hong Kong, Singapore, Australia, London and other markets may all be upping their current levels of scenario processes, as the research also found that financial services providers all over the globe are pushing their operational risk analysis to the next level.

And for the first time, international banks are coming together to determine the best way of moving this forward, KPMG claims.

It is believed that incidents including the Icelandic volcanic ash cloud, the BP oil spill and the global banking crisis have forced business leaders to focus more on risk management.

Jeremy Anderson, global chairman of financial services at KPMG, said: "As regulatory expectations have continued to shift, the focus is now more on predicting and planning for damaging future events. Top banks across the globe are evolving a proactive process, grounded in scenario planning."

The British Bankers' Association recently welcomed proposals from the European Commission on a new regulatory framework for banks, but said it was important supervision did not turn into micro-management.