Leading Through Risk: Lessons from Three Decades in Financial Services

1. You’ve led risk functions at some of the largest U.S. financial institutions. What moments or experiences most shaped your leadership philosophy?

My first significant assignment at Bear Stearns building a firmwide VaR and stress testing framework was pivotal. My quantitative models assessed we held sufficient collateral against LTCM exposure, which proved accurate during the 1998 crisis. This built confidence in my abilities and taught me that strong leadership requires command of business details—hard skills are essential.

At Freddie Mac, I built an independent market risk team overseeing an $800 billion mortgage portfolio. I assembled a strong team with deep quantitative and fixed income expertise, developing strong relationships with the CRO and CEO based on knowledge and vision. This later led to heading the pricing and securitization division.

I continued this leadership style at American Express and Bank of America as head of market risk and model risk officer. It was always based on mutual respect, knowledge sharing, and recognizing team members who exceeded expectations. A leader is only as good as the team's combined efforts. Keeping them motivated through guidance, encouragement, and recognition is leadership's main pillar.

2. During your time as Managing Director at Bank of America, how did your approach to risk management evolve amid increasing market volatility and regulation?

When I joined BofA in late 2016, model risk was increasingly important post-2008 crisis, shaped by the Fed's SR 11-7 guidance. My background in market, credit, and model risk enabled me to connect financial modeling details with risk decisions. When Covid hit in 2020, my team was prepared with clear insights on model assumptions and limitations.

The Fed's subsequent tightening and higher interest rates presented challenges where understanding valuation models, especially for mortgages impacting BofA's balance sheet, was essential. We performed well in presentations to regulators and senior management. After the 2023 regional bank crisis, we focused heavily on liquidity models, partnering effectively with the CFO division. Combining quantitative model knowledge, business processes, and economic outlook understanding was key to our success.

3. In your view, what are the most critical risks global financial institutions face today that leaders may still be underestimating?

The financial world keeps relearning old lessons. Interest rate risk resurfaced in 2023 despite lessons from the 1980s crisis. Credit underwriting has shifted to unregulated sectors like private equity, potentially creating systemic risk outside Fed oversight. Operational risk from AI adoption remains an unknown frontier.

4. Quantitative models are central to modern risk management. How do you balance advanced analytics with human judgment in executive decision-making?

Financial models have assumptions creating limitations. Understanding these is where human judgment becomes critical, requiring deep business and economic knowledge for effective deployment.

5. How are AI and machine learning transforming risk management, and where should institutions proceed with caution?

AI and ML have been effectively deployed in financial crime and credit modeling where pattern recognition is key. However, traditional econometric models should serve as benchmarks. Human judgment must supplement AI outputs at decision-making stages.

6.What lessons from past financial crises continue to be relevant for risk

Short-term memory is the biggest risk source in the financial industry. Past events involving market, credit, liquidity, and operational risks keep manifesting in new forms. Risk managers must connect the dots and recognize evolving situations resembling past events.

7. How do you effectively communicate complex risk insights to boards and senior leadership to drive timely action?

Assessing your audience is key to effective communication. With boards and senior management, be mindful of limited time, issue priorities, and appropriate technical detail to maintain engagement. Tying risk issues to bottom-line business implications is most significant. Materiality requires quantified numbers showing risk severity and framework robustness.

8.What role does organizational culture play in building resilient, forward-looking risk frameworks?

Effective risk management depends on the organization's inherent risk culture. Every employee must see themselves as a risk manager—every decision and action entails risk. The three lines of defense have primary responsibility, but the right culture demands a risk management mindset from everyone. Issues must surface early and escalate quickly for timely decisions. Formal governance frameworks of working groups and committees are risk management's bedrock. Empowering the second and third lines of defense with significant decision-making input provides the right cultural framework.

9.What skills and mindset will define the next generation of risk and quantitative professionals?

Risk management begins with understanding the business, its economic and regulatory environment, and factors impacting outcomes. Since risk requires measurable metrics, sound quantitative education is foundational—the most significant required skill. However, this is just the beginning; deep business understanding must be cultivated over time. Risk managers cannot be timid about concerns. They must remain curious and vigilant, interacting constantly with business and operations peers to hone skills. In a rapidly changing environment with advances on multiple fronts, the desire and ability to continue learning is key to sustained success.

10.Looking ahead, what should be the top three risk priorities for global financial leaders over the next five years?

Recognizing, recruiting, and building the right talent while cultivating a mindset for seeking evolving opportunities and risks. Technology firms have been depleting financial industry talent, creating significant competitive challenges for traditional institutions.

institutions. Deploying AI and ML advances for appropriate use cases while ensuring limitations and risks are understood with appropriate human intervention and judgment built into processes. This balanced approach is critical for long-term success.

Continue evolving strong risk culture with significant empowerment of independent risk management. CRO organization professionals need a seat at the table in every major decision-making process. Their independent perspective adds substantial value to strategic outcomes.