CONNECT MAGAZINE - ISSUE 15

EDITION 15

RCSA Crypto Risk Science

2025: A Year of Trump, Tariffs & Turmoil

TPRM Geopolitics

Fragility Exposed:

Why hidden imbalances threaten a far more volatile future than markets expect

Complexity Unlocked:

How finance’s virtual world reveals where real competitive advantage now lives

Power Shift:

How Washington’s early upheaval left U.S. banks bracing for unpredictable change

Control Revolution: The JP Morgan blueprint that reshaped how institutions truly see their risks

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CONTENTS

The views and opinions expressed in this publication are those of the thought leader as an individual, and are not attributed to CeFPro or any particular organization.

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FOREWORD: LOOKING BACK ON A YEAR WHEN EVERY RISK BECAME STRATEGIC

Andreas Simou, Managing Director and CEO at The Center for Financial Professionals

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Adam Ennamli, Chief Risk, Compliance & Security Officer, General Bank of Canada

Professor Clive Deadman, Director at 1905 Investments and author

DISASTER-READY BUSINESS: WHERE CLIMATE RESILIENCE STARTS

BEYOND THE NUMBERS: COMPLEXITY AND OPPORTUNITY IN FINANCE

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Craig Spielmann is Risk Intelligence Leader at CNM and founder and CEO at RiskTao

David Tuckett is a Professor and Director of the Centre on DecisionMaking Uncertainty at University College London

Freddie New, Head of Policy, Bitcoin Policy UK

Kelly Lake, Third Party Risk Manager at Legal & General

Nick Silitch has held senior risk management roles at Prudential Finance and Bank of New York Mellon, among others

RISK AND CONTROL SELFASSESSMENT – THIS TIME IT’S PERSONAL

THE SCIENCE OF CONVICTION: HOW EMOTION SHAPES FINANCIAL DECISION-MAKING

BITCOIN: A LESS RISKY AML ALTERNATIVE TO TRADITIONAL FINANCE ?

WHY YOUR THIRD-PARTY RISK STRATEGY SHOULDN’T BE KEPT UNDER WRAPS

THE ILLUSION OF RESILIENCE – ARE WE SLEEPWALKING INTO CRISIS?

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COULD TRUMP’S TARIFFS ACTUALLY MAKE EUROPE GREAT AGAIN?

Koen De Leus, Chief Economist at BNP Paribas Fortis

Regular feature in Connect Magazine

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SPEAKERS ONBOARD Stand out speakers from our upcoming Risk Evolve: Treasury Edition

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Joseph Posevic is Executive Vice President at Bank Credit Risk Solutions in Irvine, California

C. Robin Castelli, Head of Transition Finance Investing, Orange Ridge Capital

Julien Haye, Managing Director, Aevitium Limited

100 DAYS OF TRUMP - NEW ADMINISTRATION, NEW PRIORITIES FOR U.S. BANKING

FINDING ALPHA IN A WORLD ADAPTING TO CLIMATE CHANGE

PSYCHOLOGICAL SAFETY AS RISK INFRASTRUCTURE

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LOOKING BACK ON A YEAR When Every Risk Became Strategic

If you’re not learning, you’re already behind.

As 2025 draws to a close, the financial sector finds itself reflecting on a year defined not by any single turning point, but by the collision of multiple events that have reshaped non-financial risk.

Geopolitical volatility remained a constant backdrop, with shifting alliances, economic pressure campaigns and renewed tariff battles reshaping cross-border flows and testing the resilience of global supply chains.

Your next breakthrough starts here.

Connect Magazine - Stay Ahead.

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EDITION 1

AI Research

Shifting Sands of Risk: Ushering in an era of rapid change

EDITION 2

EDITION 3

EDITION 4

EDITION 5

EDITION 6

AI

Compliance

Compliance

Modeling Risk

Governance

Tariffs

Governance

Crypto

Sustainable Finance

Climate Risk

Talent

Open Banking

Compliance

Future Insight

TPRM

TPRM

Fincrime

Risk Psychology

DORA

RCSA

Emerging Risk Sustainable Finance

Ghost Data

IS THIS THE REAL AGE OF AQUARIUS

AI risk:

How Much AI is Too Much AI?:

Guest editor Chandrakant Maheshwari reviews key themes from our AI in Financial Services conference

Compliance risk:

Best practice for multiple TPRM when in-house services are in in short supply www.cefpro.com/magazine

METAMORPHOSIS:

The Science of Emotion:

Policing the Police:

Governance Risk & Reward:

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The Hidden Ideology in the Oval Office:

Alice Kelly examines the psychology of Trump’s ‘America First’ approach to global economics

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Tariffs and trade wars – we look at the potentially bumpy ride ahead for geopolitics and macroeconomics

Is Regulation Stifling Sustainable Investing:

Søren Agergaard Andersen on how an increasingly complex regulatory environment could suffocate investment innovation

Tony Hughes on how scientists and economists need to be more aligned to meet the climate challenge

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EDITION 8

EDITION 9

EDITION 10

EDITION 11

EDITION 12

Model Risk

Complexity Vs. Opportunity

Data Governance

Market Risk

Market Risk

Interest Rates

Fraud

Compliance

TPRM

Sanctions

Gen AI

Transition Finance

Risk Strategy

GenAI

Model Risk

Fincrime

TPRM

TPRM

Compliance

Complexity, Clarity and the Next Big Opportunity

ESG

Cyber TPRM

Why Finance Still Runs the World

Hidden Complacency:

Complexity & Opportunity:

Ioan Nascu asks whether easy acceptance of Gen AI puts financial institutions in harm’s way

Why double-entry bookkeeping may be history’s greatest invention – and your next big edge

The Death of ESG Box-Ticking:

Out of the Box Thinking:

First Adopters:

Keeping it Human:

Why investors are looking for integrity in sustainable investment, in spite of U.S. policy push-back on ESG

Securing the Chain:

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Why your third party vendors are the first line of defence in TPRM

How the Mutation of AI Affects Us All

AI

Sleepwalking into Trouble:

Escaping Legacy Thinking:

Why getting compliance right at the first time of asking matters

Compliance

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The End of the Age of Low Interest Rates

Scenario Planning ESG

Skin in the Game:

Why fear should drive human sentinels guarding against catastrophic decisions

Banking on Disaster:

Spreading Exposure:

Your next cyber crisis is inevitable – your response should be too

Why concentration risk is the arch-enemy of risk management connect.cefpro.com/magazines

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Publisher

Marketing

Alana Cannatella Junior Marketing Manager CeFPro alana.cannatella@cefpro.com

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Editor

Mark Norman Head of Content CeFPro mark.norman@cefpro.com

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Sales & Advertising

Chris Simou Head of Sales CeFPro chris.simou@cefpro.com

Design

Natasha Marino Head of Design CeFPro natasha@cefpro.com

Banks and insurers have embraced generative and agentic AI at extraordinary speed, unlocking new efficiencies while exposing the limits of existing governance models.

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Magazine team Andreas Simou Managing Director CeFPro andreas.simou@cefpro.com

Geopolitics

Why psychological safety should be the early warning system in hard risk infrastructure

The folly of not embedding AI into process

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In Search of Psychological Safety

Technology

Getting a Psychological Edge:

Sleepwalking into Trouble:

Watch Your Step:

AI

The War on Risk

Hunting down the cockroaches lurking in private-credit structures, controls and governance incentives

Unpacking Michelle Bowman’s compliance reality check

At the same time, the rapid expansion of artificial intelligence has transformed internal risk landscapes.

EDITION 14

Financial Pest Control:

Process vs Checklists:

The five fault lines that banks can’t afford to ignore

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Back to the Future?

Four reasons why we’ve seen the last of low interest rates… for now

The case for treating risk frameworks as a living ecosystem

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EDITION 13

The Long Goodbye:

Reanimating Risk Frameworks:

Why weak ESG governance and increasing geopolitical volatility threatens crisis

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Fintech

Why defining the right solution must start with the customer

Governance Under Fire:

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Are Tariffs an Opportunity Europe Can’t Resist?

Starting at the End:

How geopolitics, data speed, and legal ambiguity are driving sanctions compliance complexity

High Stakes Racing:

AML

Independence Day:

Sanctions Under Pressure:

How law enforcement is struggling to keep up with supercharged AI crime

From MAGA to MEGA

How Trump’s tariffs could be the wake-up call Europe needs

Build or Break:

Master of None:

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ESG Governance

The generation-defining risks of global debt, geopolitical drift, and investor short-termism

Chandrakant Maheshwari on the learning challenges facing risk’s future generation

The hidden supply chain threats conspiring to be your next big crisis

Debt, Delusion and the Volatility No One Sees Coming

AI’s Changing Dynamic:

Rita Gnutti on why model risk leaders must escape compliance legacies—or risk stalling innovation entirely

Adam Ennamli on why keeping it simple is the winning cybersecurity formula

How Deep is Deep Enough:

Model Risk

AI is rewriting financial rules – but without ethics, it could scale discrimination faster than we can stop it

Alice Kelly on why banks must embed compliance or brace for crisis

Alvaro Guevara makes the argument for financial institutions to voluntarily over deliver on model risk management

The Threat of Discrimination

Across Europe, the final stretch of the Digital Operational Resilience Act (DORA) pushed firms toward greater discipline in technology resilience and third-party oversight. The year’s major vendor breaches provided stark reminders of why this matters.

If 2025 taught us anything, it is that non-financial risk has moved from the margins to the center of strategic decision-making. The institutions that thrived were those that treated it not as a compliance exercise, but as a competitive differentiator.

Riders On The Storm:

Why People Matter:

In a new world order where AI rules, Mauricio Masondo explores the role of the human in risk governance

Science v Economics:

Trump 2.0

As the first quarter of the second coming of Trump draws to a close, Connect Magazine guest editor Joseph Posavec asks what his first 100 days tell us about the future

Deb Barnes makes the case for teamwork making the dream work

Sean Titley asks whether our Governance Frameworks are fit for purpose in a fast-moving risk environment

Model Risk

Money, Money, Money:

Why Collaboration Drives Profit:

Professor David Tuckett on a groundbreaking study into emotional response to risk management

Penny Cagan makes the case for more ownership of accountability in risk management

- What Have We Learned?

Freddie New argues that traditional currencies may be the new enemy of AML risk

Michael Sheldrick makes the argument for three ways banks need to step up to meet the challenges of climate risk in the future

Naresh Singhani looks at how technology advances can rejuvenate RCSA processes

100 DAYS OF TRUMP

Climate Risk Third Party Risk

The Effect of Crypto on FinCrime Risk:

Stepping up:

Technology Opportunities:

Redefining risk: why world events demand we think differently

Vendor Risk

Fraud

Risk Management for a turbulent age

Careers

Guest Editor Robin Castelli on why we should stop talking ESG 1.0 and start talking Transition Finance

Lessons Learned:

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Transition Risk

Transition to Transition:

Gareth Dothie examines how better education can help to reverse the spread of money mules

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Eyes on the Prize: How Far Will US Politics Move the Needle on Climate Risk

Targeting the Mules:

With the implementation deadline just a month away, Gerard Doyle looks ahead to Europe’s new regulatory reality

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Money Mules

Ionela Emmett argues that financial institutions need to look beyond the challenges of Companies House reform

The Dawn of DORA:

Givi Kupatadze examines the way in which evolving regulatory and governance demands are changing Model Risk Management

Third Party risk:

Concentration Risk

Craig Spielmann looks at why multi-event risk needs to be completely reimagined

Emma Hagan looks back at the collapse of SVB Bank and asks whether we’ve learned from the crisis

Model Risk Best Practice:

Concentration Risk: What Lessons Can We Learn from the Californian Wildfires?

Pluralizing Risk:

Seize the Day:

Patrick Fagan looks at how banks can use psychology to help manage customer risk behaviors

Craig Spielmann asks whether smaller organizations are taking risk management seriously enough

AI

Jeff Simmons makes the case for forward planning your third party exit strategies

The Power of Risk Psychology:

FinCrime risk:

The challenges facing financial institutions combating increasingly sophisticated threats

Cybersecurity

The Way Out:

Chris Smigielski explores the themes that will dominate risk management over the next 5 years

How university researchers and risk professionals are working to predict the future of risk management

2024: THE YEAR IN REVIEW

Model Risk

On the Horizon:

Institutions that once viewed geopolitics as an external factor are now treating it as a central component of operational readiness.

EDITION 7

stress from disrupted markets and vulnerable borrower segments.

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Firms learned - sometimes painfully - that AI governance, data quality and model validation are no longer technical considerations but core pillars of enterprise risk.

In this edition of Connect Magazine, we look at the stories and features that have captured the essence of a tumultuous year.

From all of us here at CeFPro, we wish you a peaceful and joyful holiday season, and we’ll see you all again in January, when we’ll be looking ahead to the challenges that 2026 is likely to bring.

Andreas Simou, Managing Director, CeFPro

The climatic shocks of 2025 reinforced this message. The Los Angeles wildfires, among other extreme weather events, revealed the escalating financial and societal cost of climate risk.

Insurers faced record losses, while bank balance sheets encountered new 5

JANUARY EDITION

RISK AND CONTROL SELF-ASSESSMENT – This Time it’s Personal

Craig Spielmann Risk Intelligence Leader at CNM and founder and CEO at RiskTao. In a long and distinguished career spanning multiple organizations, he has also held senior roles at RBS and Citi.

My journey with Risk Control Self Assessment (RCSA) began almost 30 years ago, in 1996, when I was promoted to create and lead JP Morgan’s Information Technology Risk Management function. I was in the job a week when I was asked to go to a ‘special meeting’.

As we gathered in a large meeting hall at 60 Wall Street – at the time JP Morgan’s global headquarters –the speaker explained that due to JPM and several other large financial institutions’ involvements in the Sumitomo copper trading scandal, we had to improve our internal controls by performing an RCSA for just about every process we had.

For younger readers or the uninitiated, the Sumitomo copper trading scandal involved rogue trader Yasuo Hamanaka, who manipulated global copper markets for a decade.

Using unauthorized trades and pricefixing, Hamanaka caused Sumitomo to lose $2.6 billion. The scandal highlighted inadequate oversight, shook investor confidence, and led to stricter regulations in commodities trading to prevent similar abuses.

Basically, we were told, if it moved or didn’t move at JPM, you had to do an RCSA. They gave us a simple template and said we had a year to get it done. That was not an option but a mandate.

I had no idea what it was, and when the presenter told us that we would be asking people to volunteer to point out their control weakness and risk, we thought it was like asking inmates if they were interested in running the whole prison.

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I hired a few close friends from JPM Audit, and we went out and facilitated about 200+ sessions and educated everyone on what it was and what our expectations were to complete the tasks. It was a grueling process and since we were a major global bank, that meant traveling around the world to get it done.

We finished ahead of schedule and met the company’s expectations.

And in truth, we could have stopped there and settled for what had been deemed to be adequate. But JPM’s CIO, Peter Miller, and I thought it could be better.

So, we went about changing the methodology – and in the process of doing that, we created the very first RCSA templates.

Instead of asking people what their risk and controls were, we invited them to consider and reach a verdict on the state of those controls.

Armed with that information, we gathered all the experts from BCP/DR, Information Security, HR, Technology, Operations and Audit and agreed that these were the risk and expected controls that we wanted measured.

As we started rolling out the new methodology in year 2, we designed a system – Horizon – to make it easier to capture the data and present it to management in graphical format.

We introduced special algorithms to weigh risk and controls to get as close to a realistic measurement as we could. Once patented and released more widely, Horizon made completing an RCSA much easier, and gave management a better view of their portfolio of material risk.

Suffice to say, Horizon became an instant internal hit. The internal businesses quickly adopted it and we started helping with the firmwide rollout.

It didn’t take long for then-CEO Sandy Warner to get wind of the RCSA revolution going on inside the business, and about a heartbeat later he suggested we commercialize the Horizon system.

We had no idea how to do that and decided to work with a partner. We chose E&Y to help us and developed a commercial relationship with them.

Carmine Di Sibio and Dan Mckinney were my main partners in bringing it to market, and we had many major banks, regulators and government entities as our clients.

We started to evolve the product and methodology to a point that it became a major force in identifying risk and the state of controls. We also added Loss Data Events and Audit Modules to give everything balance and create a ‘triangle’ that leveraged each component to either support or refute RCSA responses.

As time grew on, we developed more sophisticated approaches, and moved away from red, yellow and green boxes to actual loss exposures, which gave management a clearer picture of their risks.

very forward view of risk and business management. We worked with him on selecting a focused goal and strategy by simplifying it in line with our approach of ‘The five things you can do to a business’.

Those five things, in short, are to • Increase market share • Increase profitability • Improve risk profile • Increase capacity, or • Sell the business These goals are projected for 18-36 months and may change based on internal or external factors.

We then assessed all the entities against the goal and strategy to rate their potential impact. We scheduled RCSA training sessions in which discussions on implementing the business strategy were the focus.

Perhaps unsurprisingly, once the businesses realized we were talking about how they could get bigger bonuses, they completely took over the discussions.

Our clients, who represented some of the best run companies in the world and had strong risk talent, gave us a great perspective on state of the risk management techniques.

The best approach that I encountered was at a bank where the CEO had a 8

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Using this approach, the business exposure was ‘X’ and its control strength was ‘Y’. The weak controls were assessed for their impact on the exposure, and the resulting decisions on cost benefit vs. risk mitigation were openly discussed.

As a result, we then listed the processes for the entire firm, built risk and control templates based on a common taxonomy, followed by business process maps, and started the actual assessments.

The CEO didn’t want to use residual risk measurements, which he believed could be arbitrary on the basis that asking people the probability of an event occurring had the potential to merely cloud the analysis, since no one can seriously predict events given the myriad factors that needed to be considered.

As we’ve seen with so many ‘1 in 100year events’ occurring with great frequency, there will always be wildcards in play.

So, instead, he preferred an exposurebased approach that asked the business what its exposure was if its underlying assets were impacted by the chosen risk categories.

Their controls were evaluated and tested, and there was no attempt to combine the exposure and the control strength into a formula. It was viewed separately.

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The businesses appreciated this approach since it helped them to make smart investment decisions based on where they were going and what they wanted to achieve.

In conclusion, the RCSA process is still evolving and I’m sure there are other best practices out there.

It’s been a great journey to see the RCSA evolution over the last 28 years.

I’ve seen it evolve to many flavors and practical uses in everything from banking to military, energy to high school, college, and career selections.

For anyone starting on the RCSA path, patience and fortitude are required to get it right.

Put the time in, do your homework on business goals, strategy, processes, business process maps, risk and control taxonomies, and expected controls. Educate people on exactly what this is going to produce by planning the reporting and the required inputs.

Treasury & ALM USA MARCH

10-11

MIDTOWN MANHATTAN

Where treasury strategy is set.

Networking with senior treasury leaders across ALM, liquidity, balance sheet management, IRRBB and stress testing.

With first-hand insights from Citi, Wells Fargo, Goldman Sachs, BNY Mellon and other industry powerhouses Why attend?

1 Best practices on structuring Treasury and ALM teams 2 Liquidity strategies to stay resilient 3 The real impact of crypto and digital currencies 4 Navigate rate volatility without sacrificing profitability For real insight, go straight to the source.

FIND OUT MORE HERE > Or Visit https://usa.cefpro.events/treasury-alm-usa

Lastly, sell the long-term benefits.

People need to see the vision and what it means to them before they give you their valuable time. This effort and time will be worth it, giving you the best chance of making the investment pay off and reaching RCSA nirvana.

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FEBRUARY EDITION

THE SCIENCE OF

CONVICTION: How Emotion Shapes Financial Decision-Making

David Tuckett is the Director of the Centre on Decision-Making Uncertainty at University College London

Introduction: The Power of Conviction in Uncertainty What drives a financial professional to make a risky trade or hold back in times of risk?

We often assume that risk management decisions are based purely on logic and data, yet research suggests that emotion plays a much larger role than we might expect.

Last year, we spoke to Brandon Davis, from the University of Buckingham, about a groundbreaking study to uncover how emotions influence 12

financial choices—and how understanding this dynamic could reshape risk management.

In this article, another member of that academic team, Professor David Tuckett, Director of the UCL Centre on Decision-Making Uncertainty, explains the extent to which emotion informs the way humans interpret external data in order to reach good decisions around risk appetite.

The study, being run in partnership with CeFPro, also includes experts from Princeton University.

Tuckett’s Conviction Narrative Theory suggests that financial professionals rely on conviction narratives – stories they tell themselves to make sense of complex, uncertain information – when making high-stakes decisions.

Decoding Conviction Narrative Theory Conviction Narrative Theory (CNT) challenges the traditional notion that rationality alone drives financial decision-making. Instead, Tuckett explains that “under radical uncertainty – that is, contexts in which at the time you make the decision,

you can’t know the outcome – people draw on conviction narratives to support their actions.”

These narratives act as mental shortcuts, helping us to navigate an overwhelming amount of data, filtering information, highlighting perceived risks and opportunities, and creating an emotional response that guides action.

As Tuckett puts it, “the brain is a constant interaction between thinking and feeling.”

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Put another way, a CRO reading a data report isn’t just processing statistics; they’re also experiencing gut reactions that influence the way they interpret that data.

To test this theory, Tuckett and his team conducted an online experiment - which they opened to open to Connect readers – in which participants read different financial texts and then indicated whether they would buy or sell a particular asset, or accept or decline a particular risk.

By analyzing how specific words and emotional cues influence decisions, the study aimed to determine whether financial professionals are subconsciously guided by emotionladen narratives.

How Words Shape Financial Risk Perception The research built on previous studies showing that language can signal shifts in market sentiment. By applying CNT to large text databases – such as Reuters News or the Bank of England reports – the team has already demonstrated that emotional language in financial texts can anticipate market trends.

One striking example, Tuckett says, comes from their analysis of news coverage in the years leading up to the 2008 financial crisis.

“One result we found was that if you plot a graph showing the relative amount of excitement minus doubt or anxiety in articles about Fanny Mae, you could see an upward trend right up until the crash happened,” he says.

“But very interestingly, if you plot that graph against the Case-Shiller housing price index, you see that in 2006, it began to turn down. Yet it had no impact on sentiment or the share price.”

This suggests that financial markets may be slow to react to fundamental changes because prevailing and exciting “phantasmic object” narratives override emerging warning signs.

If traders and analysts remain emotionally invested in such exciting stories, they may ignore factual data that contradicts it.

Testing the Theory: An AI-Driven Future Tuckett’s project is not just about understanding how narratives influence decisions – it’s also about applying this knowledge to improve financial forecasting.

By identifying which words and phrases trigger approach (confidence) or avoidance (fear), the team hopes to build AI models capable of detecting hidden market risks.

“Supposing you ran these AI models over analyst reports of different investment opportunities,” Tuckett explains, “they would probably pick up things that could not be detected just by reading and making sense of the words.”

This could be an invaluable tool for financial institutions, allowing those organizations of scale to analyze internal reports for unseen risks or even predict shifts in market sentiment before they happen.

The experiment will culminate in AI models designed to analyze financial texts more accurately, providing traders and analysts with an early warning system for emerging risks.

“The survey was due to complete in the spring of this year, with the AI models it informed scheduled to be available from early summer.” says Tuckett.

Emotion: The Hidden Driver of Financial Decisions The implications of CNT extend beyond financial markets. If professionals in high-stakes fields 14

unconsciously rely on conviction narratives, it raises questions about the role of emotion in all forms of decision-making.

Interestingly, many financial professionals pride themselves on their ability to suppress emotion when assessing risk.

But Tuckett argues that emotion isn’t just unavoidable—it’s essential.

“There are financial professionals who say that the way to assess risk well is to keep your emotions out of it,” he says. “But I would say the opposite. I mean, clearly you don’t want uncontrolled emotions, but basically emotion stimulated in our brains is a very, very important part of information. Human beings have evolved to use their emotions to pick up stuff.”

If the team’s research proves successful, it may force a reevaluation of conventional wisdom in risk management. Rather than viewing emotion as a weakness, firms may begin to recognize it as a powerful tool – one that can be harnessed to improve risk assessment and decision-making.

As financial markets grow increasingly complex and volatile, the ability to understand and measure sentiment could become a game-changer.

Tuckett’s work suggests that the next frontier of financial analysis may not lie in crunching numbers – but in decoding the narratives that drive them.

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On February 25–26, 2026, London becomes the meeting point for global leaders in sustainable finance at CeFPro’s 3rd Annual Sustainable Finance Europe.

Hosted at the Leonardo Royal Hotel London City, this two-day event brings together senior experts and thought leaders from across the financial sector to address the evolving challenges, innovations, and regulatory developments shaping the future of sustainable finance.

Through forward-focused discussions, attendees will explore how the industry is navigating the complex geopolitical landscape while maintaining commitment to sustainability goals. Sessions will examine regulatory compliance, capital structures, and risk management strategies amid an uncertain policy environment, alongside critical conversations on adaptation, resilience, and the physical risks impacting financial systems.

Sustainable Finance Europe

Key themes will include transition finance and the opportunities within the global energy shift, as well as the growing importance of nature and biodiversity in financial decision-making.

With insights from leading institutions, regulators, and innovators, Sustainable Finance Europe 2026 offers a unique platform to benchmark strategies, expand networks, and prepare for the next phase of sustainable growth and resilience across the financial ecosystem.

Stand Out Speakers February 25-26, 2026

Laurent Bassi

Head of Sustainable Finance ING Bank France

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Laurent Bassi is the Head of Sustainable Finance for ING Bank France since 2022.

He is an experienced international banker with more than 25 years of experience in investment and corporate banking and corporate/business development between Brussels, London and Paris across products and sectors. Prior to his current role, Laurent Bassi was heading the Capital & Structuring Advisory team in France since 2013. From 1999 to 2013, Laurent Bassi was a TMT investment banker for RBS and ING Barings based in London. Laurent Bassi started his career in 1997 with Orange and Orange Belgium (then Mobistar) based in Brussels where he worked on Corporate and Business development including the IPO of Mobistar.

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Daniel Bressler

Ross Keeling

Dan is a Director on the ESG & Climate Capital Markets Corporates team. He supports NatWest Markets clients with the structuring and execution of sustainable finance transactions and engaging with investors and other relevant stakeholders on ESG topics. He has been involved in transactions for the real estate, consumer, and utilities sectors. He also advises clients on developing sustainable finance frameworks and strategies to align with industry principles and regulations.

Ross Keeling is Origination Director for HSBC Commercial Banking focussed on originating Sustainable Finance transactions across Europe. Ross joined HSBC in 2013 as a Relationship Manger in Ireland covering Large Corporate clients across a number of different sectors. Since 2018, Ross has lead HSBC Ireland’s CRE & Infrastructure proposition and has worked on various sustainable finance transactions in recent years having developed a keen interest in the topic. In early 2022, Ross moved into a dedicated Sustainable Finance role tasked with building out HSBC’s proposition across Europe with a particular focus on sustainable infrastructure. Prior to joining HSBC, Ross worked in Project Finance with KBC and covered Food & Agriculture clients with Allied Irish Banks. Ross has a Bachelor’s degree in Business & Economics from Trinity College Dublin where he also completed an Executive MBA.

Director, Climate & ESG Capital Markets Natwest

He received a Bachelor of Science in Accounting and Marketing from New York University and a Master of Science in Applied Social Research from Hunter College in New York in 2013.

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Origination Director, Sustainable Finance Europe HSBC

Valentina Ramirez Head of Climate Strategy and Implementation (A&R) IIGCC

Valentina Ramirez is Head of Climate Strategy Implementation at IIGCC, leading the delivery of the Net Zero Investment Framework and integration of Adaptation and Resilience, Nature, and Emerging Markets into our investor tools. An economist and CFA Charterholder, she holds an MSc in Philosophy and Public Policy from LSE. She began her career at Grupo Bancolombia in the asset management and investment banking teams and later worked as a climate finance consultant at Genesis Analytics and Deputy Head of Natural Capital Advisory at CrossBoundary.

With over 16 years in financial services, Diana Patrascu currently leads sustainable finance product development and mandate design at the European Investment Fund (EIF), where she developed the first panEU sustainable finance portfolio guarantee.

Her work supports financing in line with the EU’s green transition ambitions. Previously, she developed, launched, and managed EIF’s InvestEU debt instruments focused on sustainability, innovation, and digitalization.

Before joining EIF, Diana headed funding and capital management at a top-tier commercial bank in Central and Eastern Europe, overseeing long-term funding, IFI relations, and bond issuance—including pioneering local capital market instruments such as subordinated and AT1 bonds, as well as securitizations and portfolio guarantees.

Diana Patrascu

Head of Sustainable Finance Unit European Investment Fund

To find out more about our upcoming event click here >

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MARCH EDITION

BITCOIN:

A LESS RISKY AML ALTERNATIVE

TO TRADITIONAL FINANCE?

Freddie New is a General Counsel and the Head of Policy at Bitcoin Policy UK and the Co-Founder of ICDEF – a politically independent cryptocurrency research platform. He has held a number of senior posts as lead or General Counsel in commerce and industry in the UK.

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Ask most people about Bitcoin, and you will get a few predictable responses, usually derived from a half-remembered 2013 newspaper article. One of the most common is that it’s simply a “tool for criminals”.

But even if this was true more than a decade ago, is it still the case, given both the nature of the Bitcoin network and all the developments in the space since then?

Bitcoin is many things, but one of its most fundamental characteristics is its transparency. Most simply, you can think of Bitcoin as a public ledger

of transactions with an inbuilt messaging system to update everyone who can make changes to that ledger whenever value moves from one party to another.

Unlike the movement of funds through traditional bank accounts, every single one of these transactions is absolutely transparent and can be viewed by any member of the public using a computer or a mobile phone.

Many such ‘block explorers’ exist and they are increasingly used both by law enforcement and by companies such as Chainalysis2 to monitor and trace the movement of Bitcoin on the distributed ledger.

This radical transparency actually makes Bitcoin a uniquely unsuitable medium for criminal activity of any kind.

Examples of this unsuitability abound, but perhaps the most famous is the work done by the FBI in successfully tracing the Bitcoin stolen from an exchange known as Bitfinex, and the subsequent identification and arrest of the perpetrators3.

It is worth reading the FBI’s evidence in full, as this provides a fascinating insight into the way in which law enforcement is easily able to trace movements from wallet to wallet, and ultimately to the point where the Bitcoin addresses may be linked to an identifiable individual. This is not the place to set out a full description of the FBI’s work, but the image below is a powerful illustration of just how hard it is to hide when using a transparent distributed ledger:

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The final piece of the puzzle is understanding the relationship between Bitcoin addresses or wallets and people in the real world, whether legal or natural.

Bitcoin on the ledger is transferred between ‘addresses’, which are alphanumeric strings. As a system, it is therefore ‘pseudonymous’ rather than anonymous, and typically, Bitcoin is bought and sold on exchanges, which are increasingly being brought within the ambit of global regulatory bodies.

As part of this process, these exchanges perform market-standard and bank-like KYC on their customers, and are subject to the Financial Action Task Force’s Travel Rule.

The moment at which an identifiable person is linked to a Bitcoin address is that final piece of the puzzle. At that moment, every single transaction ever made by that person is revealed - not What is even more important to understand is that while such radical transparency is a huge benefit for law enforcement, it doesn’t stop there.

The Bitcoin ledger is, quite literally, immutable once a record has been created in it.

Again, this is not the place to provide an in-depth explanation of the Bitcoin mining process, but in summary in order to add a new transaction to the ledger, specialized and costly computers – known colloquially as ‘miners’ – are required to expend a massive amount of energy in competing to guess a randomly generated number.

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merely the final step where Bitcoin was transferred to the exchange, but the one before that and before that.

In short, the transparency and immutability of the Bitcoin ledger are a boon to law enforcement.

Not only that, but because this transparency is widely known, it has become reasonably obvious to the majority of bad actors who want to transact in private that Bitcoin is a uniquely bad way of doing it.

They can’t hide their tracks, and they can’t expunge transaction records, ever.

It’s not even a case of waiting a number of years for bank statements and records to become lost or obsolete; the Bitcoin ledger will remain available for review, without any limitation in time, potentially for as long as the internet exists.

There are no shortcuts to this process, and it cannot be forged or faked - it is the process that makes Bitcoin arguably the most secure ledger the world has ever seen.

Once a transaction has been written on the blockchain, it cannot realistically be changed – it remains there, public and completely immutable, and viewable by anyone with a smartphone.

More importantly, these immutable and public records are admissible in court, and once made cannot be changed or obfuscated by bad actors.

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So, far from Bitcoin being a tool for criminals, the data now shows that criminals are actively choosing not to use Bitcoin at all - likely because it serves their purpose so badly.

The latest data from Chainalysis shows that across the whole cryptocurrency market, the total likely volume of illicit transactions in 2024 was a mere 0.14% of all transactions made.

Like Yevgeny Prigozhin4, it appears that the vast majority of criminals actually prefer to use the traditional financial system for their illicit activity.

So what are the implications here for risk and compliance teams, and for fintech and traditional finance firms looking to adopt best practice in this area?

In many cases, if a firm is seeking to extend the services they offer to include Bitcoin exposure or Bitcoinadjacent services, best practice would begin with a scoping exercise

to understand the genuine properties of Bitcoin, of the transparent and distributed ledger, and a thorough risk assessment based on factual reality, and not newspaper articles from more than a decade ago.

In the practical implementation of any form of Bitcoin services, the best place to start is essentially in a thorough application of existing KYC and AML practices, together with similar professional advice, but in the knowledge that, unlike the traditional financial system, Bitcoin has many properties of transparency and immutability that make it uniquely poorly suited to criminal activity, rather than the reverse.

It is a slight irony that, over time, it may become clear that firms have a greater risk of exposure to bad actors when dealing with the familiar banking system than they do when dealing with Bitcoin transactions.

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25

APRIL EDITION

100 DAYS OF TRUMP New Administration, New Priorities in U.S. Banking Joe Posavec, an Executive Vice President in the Bank Credit Risk Solutions Specialty Practice of Newmark, has in-depth expertise with many aspects of banking, credit and regulatory compliance. Based in Irvine, California, he brings more than 30 years of experience in real estate, capital markets, banking and technology to the practice.

We find ourselves at the threshold of the first one hundred days for the new administration and are compelled to evaluate how it has impacted U.S. Banking.

Their campaign zeroed in on several issues and promised reform at all levels of government. So, what does the scorecard hold on making good on these pledges?

A record number of Executive Orders were signed by the President during the first few weeks in the Oval Office and a flurry of subsequent changes continue to flow through all levels of government. The banking and financial sector oversight is also included in this dynamic agenda.

The most obvious signs point to new leadership appointments to key agencies, commitments of regulatory agencies overhaul and rollback of 26

overreaching enforcement on several fronts.

Thus far, they have held true to their commitments and have disrupted just about every federal agency. The approach may be a bit brutal with agencies being required to make large staffing and budget cuts in a noticeably short timeframe, and some, for example CFPB, completely disseminated.

On the bank regulatory side, the key agencies are also cautiously in limbo and awaiting similar reductions and restructures.

This act took several years to be molded, approved, and implemented. Its removal now brings CRA requirements back to a pre2023 era of less stringent mandates.

The second rollback occurred surrounding Climate Change Risk Scenario Analysis that has now been removed from OCC’s governance and oversight (OCC Climate Risk Withdrawal).

This effort was the U.S. regulatory response to the ECB, and other global initiatives designed to address financial risk due to climate change in form of either transitional, or physical risk.

Scenario Analysis in its final form, was a half-hatred effort at best and only aimed at larger banks. Therefore, its removal should not yield a major impact to the industry.

There are two key rollbacks that have already taken place recently with direct impact to this sector. The first being the rescinded Community Reinvestment Act Final Rule that came into play in October of 2023 (FRB - CRA).

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The question now would be on how much of this oversight will default to Climate Change Risk segments of BASEL III Endgame (BIS - BASEL Final Rule - CCR).

In addition, we attempt to understand how they will apply analogous efforts to align these segments with the broader BASEL framework.

There are components within this global effort that require large financial investment into renewable energy, banks to hold reserves against

climate related risks, and procedural changes (Georgetown Law Review, Risk Allocation in Green Energy and Climate Change, 02-07-2024).

Several other changes are also anticipated as the newly elected and appointed leaders continue their overhaul of government oversight.

The main goal seems to be one of streamlining banking surveillance and creating more transparency throughout the agency network.

There is also a focus in identifying overlapping layers and redundancy

between the different bureaus. This includes a revisit to the always popular Stress Testing program which is also expected to be streamlined towards a less intrusive, more consistent and clearer program.

The overall impact to the industry is highly dependent on how these changes are perceived, with no shortage of opposing views.

If you agree with Morgan Stanley’s assessment of these proposed changes, it paints a picture of an invigorated financial sector, booming capital markets and strong earnings across the board (Morgan-Stanely, Research 03-18-2025).

KPMG offers a different perspective and cautions for a need of expanded stress testing to include the highly publicized trade policy shifts, political factors, social trends and geopolitical tensions.

They emphasize the fact that a new, streamlined testing approach may not fully encompass a broad enough model to include political uncertainty and global impacts on our financial

28 28

markets (KPMG, Bank Stress Testing, 0301-2025).

The fact that these two power-players in the financial arena have such different points of view, accurately reflects the vastly different perceptions within the industry.

In summary, these first one hundred days offer, at most, a glimpse into the direction that the new administration has chosen to pursue surrounding regulatory framework of government oversight.

The banks and the rest of the financial sector have also begun to digest and analyze how these changes will impact their operations and business lines as well as compliance priorities over the next few years.

We must caution the industry against jumping to any concrete conclusions as it is clearly too early in the process.

Thus, the wait and see approach appears to be prudent for the next several months, allowing us to see where some of these changes will actually land.

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MAY EDITION

DISASTER-READY

BUSINESS: Where Climate Resilience Starts Regular columnist, Adam Ennamli, is the Chief Risk, Compliance & Security Officer at General Bank of Canada and was formerly Global Vice President, Operations & Technology at Thomson Reuters

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It has long been evident that climate change has hugely divisive power when it comes to opinion on how the world might best avoid the looming consequences of a centurieslong disregard for nature and the environment.

With the Doomsday Clock currently set to 90 seconds to midnight – the metaphorical ‘time’ of a world-ending catastrophe – the arguments around climate risk are no longer about whether the world is in environmental crisis, but rather about what steps need to be taken to avert it.

As we know, the financial services industry finds itself as a fundamental part of that debate, because climate risk has transitioned from theoretical

concern for future generations to a clear and present danger right now.

It is this central tenet that lies at the heart of General Bank of Canada’s approach to reshaping traditional risk models so they reflect and meet an urgent challenge that, Chief Risk Officer Adam Ennamli argues, is in the here and now.

A central part of that strategy has seen the bank integrate climate considerations into the very core of lending and capital allocation.

For Ennamli, climate change is a material risk to assets, customers, and the bank’s own balance sheet.

“We are shifting climate from a theoretical exercise to a tangible

31

factor in asset-level decisions,” he said, pointing to Canada’s evolving regulatory landscape, and particularly to OSFI’s B-15 guideline, which mandates financial institutions to measure and manage climate risk like any other risk class.

By modeling scenarios such as a once-in-a-century flood in the Fraser Valley or wildfires sweeping through the Okanagan, the bank quantifies not just the direct damage to collateral, but also ripple effects across affected portfolios.

That means thinking differently about loans, especially those exposed to physical or transition risks. In British Columbia, for example, properties in flood-prone areas now trigger deeper risk assessments.

“We have no physical branches, but our value chain still spans the country,” Ennamli says, adding that the bank’s digital operating model does not exempt it from systemic shocks.

In Alberta, borrowers in the energy sector are being evaluated for their resilience to future policy shifts. This strategy, Ennamli explains, involves harnessing geospatial data, satellite imagery, and scenario-based modeling to analyze exposure with asset-level precision.

“Satellite imagery is being used to pinpoint assets at risk of wildfires, and then adjust the exposure accordingly.”

General Bank of Canada is also embedding climate risk into its stress testing.

When it comes to credit decisions, Ennamli’s approach is unapologetically data-driven. Underwriting practices now include what he terms a ‘climate overlay’.

Mortgages for homes in high-risk fire zones, for instance, may come with higher rates or stricter insurance conditions. For corporate clients, the bank is piloting a climate risk scorecard that evaluates borrowers on exposure to physical and transition risks, as well as their mitigation efforts.

Balancing near-term profitability with long-term climate resilience is one of the thorniest dilemmas in financial services. Ennamli tackles this challenge with financial modeling. “Upgrading a Toronto data center might cost $3 million now but could avoid $12 million in losses over 15 years,” he explains.

“A 2% dent in quarterly profits from flood insurance could cut tail-risk losses by 20% in a severe event.”

For these trade-offs, the bank uses

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tools like Monte Carlo simulations and discounted cash flow models to quantify the return on resilience.

General Bank of Canada is not attempting to solve this alone. The bank is active in industry working groups, particularly those led by the Canadian Bankers Association, and collaborates with analytics providers and universities to stay ahead of evolving climate science.

In Ennamli’s view, the future of banking lies not just in managing financial capital, but also in stewarding climate intelligence.

Institutions that embed climate resilience into their operations, stress tests, and underwriting frameworks today will be the ones best positioned to withstand tomorrow’s shocks.

“Strategic climate resilience isn’t merely a cost – it’s a value driver,” he said.

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JUNE EDITION

BEYOND THE

NUMBERS: Complexity and Opportunity in Finance

After starting work as an engineer, Clive Deadman spent 9 years in private equity/ corporate finance and then 20 years with United Utilities and Electricity Northwest. In recent years Clive has worked as Chair and Non-executive Director of a range of organizations and is a Professor of Water and Energy.

36

I haven’t admitted it to my friends yet, but I think double entry bookkeeping is arguably the most exciting invention ever.

By making fraud difficult, investors can invest … and pretty much all other innovations then become possible.

The fact financial services can make a claim to have sponsored the greatest innovation ever illustrates some of the unique and all-pervasive characteristics of the sector. It also gives us clues on where we might first look for new opportunities.

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The eternal challenge is to ensure the ‘virtual’ world contains sufficiently accurate records of what a corporation did, does and will own, create and sell.

What Is So Special About Finance?

Firstly ‘finance’ is desperately important. All commercial activity is wholly dependent on financial services of one form or another.

But the financial services organizations have another unique quality. They are, compared with all other industries, more ‘transparent’.

This means they have lower levels of what I refer to as ‘un-managed complexity’.

Un-Managed Complexity The challenge when managing value and performance in any activity is having the information you need to make a good decision. And this is harder than it looks, because in business there are two ‘worlds’ which need to be managed: •

•

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Physical world: Where goods are manufactured and delivered, customers receive services, and our employees get paid and live their lives.

Virtual world: This is where activity is administered. Records are kept of stock, debtors, cash and other assets that need to be managed.

If information is poor the business is not ‘transparent’ and managers can’t see and manage value well.

It has a high level of ‘un-managed complexity’. This means everyone in the organisation needs to rely on others to be efficient and effective.

This particularly applies to business leaders. The chair of the board and CEO may have huge authority, but they will also experience the greatest separation from the day-to-day information that decision making needs.

The exciting thing about financial services, which are different from all other activities, is the products and the services it provides exist wholly in the ‘virtual’ world.

That is not to say there is no ‘physical’ world for an insurer or a bank. There is. Employees live and work in the physical world. They can be tempted to commit non-compliant acts, and customers and counterparties are all ultimately human. But all the same, compared with all other industries, properly managed financial services ought to have comparatively low levels of un-managed complexity.

What is Business Climate?

We are not talking about net zero or climate change here. We are talking about the rigor and volatility of regulation, and the ‘clock speed’ of competition.

The world over, financial services operate in the harshest and most challenging of all ‘business climates’.

If you work in the sector I don’t need to explain this any further. But for observers new to the sector, it’s really tough.

Regulators keep introducing new requirements, and while implementation is intended to be progressively ‘risk based’, courts across the globe retrospectively reinterpret customer and counter party entitlements.

We should try not to complain – financial services are so fundamental to all activity that this level of scrutiny and oversight is inevitable. But what does all this mean? How can any of this help us find personal and corporate opportunities?

As a starting point, it helps us know where to look for opportunity.

Does that mean they are easy to manage? Sadly, no, because there is another factor to consider.

Compared with all other sectors the regulatory environment in financial services is demanding and tough.

But there are differences. Smaller businesses also get something of a free pass, and other activities, such as trading, have particularly aggressive business climates.

That is ‘business climate’. And financial services operate in undoubtedly the most demanding business climate of all.

So, if you are a business looking to adopt new compliance measures, you may find the people and the systems you need in the highest

value and most rigorously regulated sectors.

Introducing effective compliance measures might not be sexy, but it can confer competitive advantage and it does keep business leaders in employment and out of prison.

If you’re thinking of a career move, look to those industries who will most value your skills.

In every industry – shipping, infrastructure management, medicine and advertising – we see future business leaders learning their trade in higher value, low un-managed complexity sectors before moving on and up into senior leadership roles, to transform and enhance less well organized businesses.

And with artificial intelligence and machine learning upon us, the ability to use information for competitive advantage might even become more exciting than double entry bookkeeping.

The fact that financial services can make a claim to have sponsored the greatest innovation ever illustrates some of the unique and all-pervasive characteristics of the sector.

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JULY EDITION

WHY YOUR THIRD-PARTY

RISK STRATEGY SHOULDN’T BE KEPT UNDER WRAPS

Kelly Lake is a Third Party Risk Manager at Legal & General. She has previously held senior risk and technical management roles at Benchmark Capital and Fusion Wealth

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In a cost-conscious environment, demonstrating the value of a Third Party Risk Management (TPRM) program can feel like nailing smoke to the wall, but articulating the ROI of your program is fundamental to protect the function during leadership and budget changes, and help secure strategic influence in decision making.

This article - the first in a three-part series - explores why demonstrating value is a strategic imperative, how to frame it in terms that resonate with stakeholders, and practical ways to make its impact measurable and visible.

Shine a light on what’s not happening When success is marked by the absence of incidents, an effective TPRM program can be its own worst enemy. At its most effective it can look like nothing is happening.

While the benefits – like operational resilience, regulatory compliance, and reduced exposure to cyber threats and geopolitical events – are undeniable, they’re often hard to quantify, and even the most critical functions can be overlooked if their impact isn’t visible.

This makes TPRM vulnerable to being misunderstood, under-resourced, or deprioritised.

To counter this, TPRM leaders must be creative.

Track the frequency of vendor related incidents, breaches, and compliance issues over time, and capture emerging and developing trends as the program matures to show the impact your program is having on the frequency and severity of risk events.

Showcase the effectiveness of your interventions – like remediation plans, improved risk assessment at 41

onboarding, or continuous monitoring – by developing risk scoring models to establish a baseline and show improvement over time.

This visual storytelling makes the impact of your program tangible and helps you link improvements to actions to support decision-making, and starts to turn risk reduction into cost avoidance.

Put a price tag on risk avoidance Once you have established your metrics, start turning that data into a tangible illustration of cost avoidance gains.

Use industry benchmarks like the average cost of a data breach to estimate savings from avoided incidents based on the incident volume metrics you already have, or the potential cost of regulatory fines or penalties you might incur without proper controls in place.

Value not shown is value not seen. Don’t let your work be the best kept secret in the business.

Go further by analyzing ‘near miss’ events. These powerful case studies show what could have gone wrong without TPRM. By estimating the cost of these avoided incidents, you can demonstrate real-world savings and reinforce the value of your program.

It’s easy to focus on escalations and issues in your reporting to risk committees and senior managers but prioritise sharing the wins too.

Share success stories and use scenario modelling to show how TPRM prevented costly outcomes.

Real examples resonate more than abstract metrics.

Understanding what value looks like to your stakeholders Risk professionals are often ahead of the curve, scanning the horizon for threats others don’t yet see. We build frameworks, assess supplier risks, and mitigate exposures that could derail operations or damage reputations.

The value of TPRM is not always obvious to those holding the purse strings, but even the best strikers can’t win if the defence is leaking goals, so risk professionals must become advocates for their own impact.

impact. Helping stakeholders understand the value you deliver will pay dividends in securing resource for your program and building the case for additional headcount or implementing new tooling and systems.

To bridge this gap, invest in and develop dashboards and management information (MI) that clearly communicate your program’s

This article was first published in Connect as part of a series of articles by Kelly Lake. You can read parts 2 and 3 on our online Connect knowledge hub.

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43

AUGUST EDITION Over the course of a stellar career punctuated by senior roles in some of the gold standard financial institutions around the world, Nick Silitch has seen a thing or two in his time.

THE ILLUSION OF

RESILIENCE

Are We Sleepwalking into Crisis?

Nick Silitch is a highly respected author, adviser and consultant within the financial risk sector. His career includes senior roles at leading financial institutions such as Prudential Finance and Bank of New York Mellon.

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He’s seen, managed and weathered the storms of the various financial crises that make up the financial services scar tissue over the last few decades.

So when he warned, in his wide-ranging and unflinchingly sober keynote session at CeFPro’s flagship Risk Americas 2025 conference in New York, that financial institutions are underestimating financial and non-financial risk, people tend to listen.

The current economic and financial climate, Silitch says, reflects a decades long environment where significant risk has been added to the system.

On a macro level this translates as a six-fold increase in US debt issued since 2000 – an eyewatering $30 trillion plus; at a market specific level, private debt markets, CLOs, NAV lending, and other financing techniques have added remarkable levels of leverage to the private investment ecosystem.

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It’s for this reason that he voices concern that future volatility might serve to make the corrections and volatility of the past 30 years seem modest by comparison.

This cyclical behavior reflects more than just liquidity mechanics; it points to a structural short-termism in investor psychology.

Time and again, markets have been quick to discount tail risks – from geopolitics to cyber threats and ballooning fiscal deficits – so long as there is no immediate catalyst to force a reckoning.

What sets this period apart is not the volatility itself, but the scale of the imbalances and fundamental fragility lurking beneath it.

Silitch warns that the path to a new equilibrium will likely be much more volatile and take longer – perhaps decades – to achieve because the imbalances are larger.

“The risk of an event sparking heroic volatility is growing,” he says.

The dollar remains dominant, but that dominance is increasingly challenged – not through dramatic collapses, but through the slow reallocation of reserves, the quiet shift in global trade settlements, and the geopolitical aftershocks of unilateral policy decisions.

Resilience is, naturally, key. But so, too, are economic (and, for that matter, political and military) alliances. The landscape is more nuanced, and with nuance comes greater fragility.

In some ways, Silitch argues, the current landscape of alliances – particularly in the Middle East – risks putting us closer to the socioeconomic imbalances that culminated in the Great War than at any other time in the 111 years since it began.

The risk of an event sparking heroic volatility is growing.

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Small things, he says, now have huge potential impact. What, he wonders, would a modest surcharge on the dollar do to the landscape of the American economy?

“More than 60 percent of the world’s financial assets are denominated in dollars, yet we are under 30 percent of the worlds GDP,” he says.

What too, of interest rates, which, he says, are only heading in one direction for the time being – regardless of what the Fed might like?

And then there’s Trump’s trade war, and, in particular, what the president calls his ‘Big Beautiful’ fiscal bill that will keep the U.S. deficit at 6-7% and its $36.2-trillion debt pile ballooning.

Resilience should not be mistaken for durability. The risk premium priced into markets today fails to account for the long-term implications of unsustainable fiscal trajectories and policy-induced distortions.

Historical analogies – such as the Southern European sovereign crises or the liquidity dislocations of the global financial crisis – offer sobering reminders of how swiftly market confidence can unravel when catalysts emerge.

As non-bank lenders increasingly fill gaps once occupied by regulated institutions, a two-tiered system is emerging – one in which private capital benefits from regulatory arbitrage while traditional banks bear the social obligations of financial intermediation.

Without a deliberate policy framework to address this imbalance, the U.S. risks distorting the competitive landscape and weakening the resilience of the broader financial architecture.

Despite the obvious headwinds, the outlook is not irredeemably grim.

Adjustment mechanisms still exist.

Market forces, institutional guardrails, and elements of policy pragmatism offer a path to course correction – if not reform.

But the window to act without the impetus of crisis may be narrowing.

History suggests that real reform tends to follow trauma.

And while hope remains that today’s challenges can be met with foresight rather than reaction, the gravity of risk demands not just vigilance, but urgency.

47

SEPTEMBER EDITION

COULD TRUMP

TARIFFS MAKE EUROPE

GREAT AGAIN? Koen De Leus, Chief Economist at BNP Paribas Fortis, specializes in macroeconomic trends, financial markets, and strategic analysis, with extensive experience advising on economic policy, investment strategy, and global market dynamics.

48

It’s perhaps an understatement to say the protectionist policies of the current Trump administration have rattled economies worldwide.

But for all the hand-wringing that met the announcement of what, if implemented at face value, will be historic export tariffs, is it possible that they may yet offer Europe an unlikely opportunity to reinvent itself as an economic powerhouse?

That’s certainly what Koen De Leus, Chief Economist at BNP Paribas Fortis, believes: an unexpected chance to strengthen Europe’s economic foundations and reduce its vulnerabilities.

49

Maybe Trump is making Europe great again by pushing us to become less dependent.

Another critical shift would be increasing intra-European trade.

Currently, about 60 percent of EU member state exports remain within Europe, with only 6 percent going to the U.S. “I think it’s a wake-up call,” says De Leus. “We’re only now realizing that we’re too dependent on other countries. Before the invasion in Ukraine, we were too dependent on Russia for our energy, on China for our exports, and on the United States for our defense.”

In many ways, the war in the East has served to further deepen the extent of that dependence, with Europe sourcing more gas from the U.S. and redirecting more exports there as China’s real estate crisis dampens demand.

The challenge, according to De Leus, is that this increased reliance has come at a time when an overtly protectionist president resides in Pennsylvania Avenue.

“By pushing us into an era when we’re forced to find greater independence, maybe Trump is actually driving us to make Europe great again,” he offers.

De Leus sees the potential for Europe to not only diversify its economic 50

relationships but also position the euro as a more credible alternative to the U.S. dollar as a reserve currency.

While he stops short of predicting that the euro will replace the dollar, he argues that growing suspicion toward U.S. policy could create an opening - provided Europe makes significant changes.

Those changes are outlined in part in the Draghi report, which calls for deeper energy integration within Europe. By building an interconnected energy market across member states, supply could be balanced more effectively.

“In Norway, when the wind doesn’t blow, they will get the Spanish sun, and in Spain, when there is no sun, they will get the Norwegian wind,” De Leus explains.

This, he argues, would reduce dependency not only on the U.S. but also on fossil fuel imports from outside the continent.

Raising that internal figure to 70 percent, for example, would lessen exposure to U.S. tariffs. However, De Leus warns that non-tariff barriers - such as divergent labeling requirements for products like milk or incompatible railway systems between countries - act as a drag on trade.

steps, arguing that a unified capital market would pool European savings rather than leaving them scattered across 27 separate national systems.

Combined with banking integration, this would not only improve efficiency but also support the euro’s ambitions as a reserve currency.

De Leus believes the next four years - the remainder of Trump’s current term - could be transformative if Europe seizes the moment. A more productive, better integrated single market could emerge, benefiting both the economy and the banking sector.

The IMF estimates these barriers for goods are equivalent to a 43 percent tariff. Cutting that to 10 percent, he says, would render U.S. tariff policy far less relevant. For services, these nontariff barriers amount to 110 percent on average.

So, with a more interconnected Europe, what, then, might be the UK’s role post-Brexit? While De Leus considers Brexit “a big mistake,” he sees the potential for the UK to participate in what he calls a “coalition of the willing.”

Strengthening Europe’s single market would also make its companies more scalable.

This concept, already taking shape in defense cooperation involving non-EU members like Norway, could extend to areas such as energy, electricity markets, and financial services.

“Starting a company in Belgium and becoming big in Europe is very, very difficult because the rules everywhere are different,” De Leus says.

For the financial sector, he points to the creation of a capital markets union and a banking union as vital

“Europe with the UK is much stronger than Europe without the UK. An alliance of this kind gives the UK an opportunity to reconnect with the European continent.”

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North America’s essential risk conference returns - bringing together senior practitioners solving the industry’s most pressing challenges.

REGISTER FOR RISK AMERICAS UPDATES > Or Visit https://events.cefpro.com/l/847733/2024-03-06/2nw5q7

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Be at the forefront of global risk leadership.

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OCTOBER EDITION

FINDING ALPHA

IN A WORLD ADAPTING TO

CLIMATE CHANGE

C. Robin Castelli is Head of Transition Finance Investing at Orange Ridge Capital. He’s an expert in climate risk, transition finance, and private equity, with a strong background in quantitative modeling, financial analysis, and strategic management.

The adaptation to a warmer planet isn’t only an environmental story - it is the largest capital reallocation in human history. For investors, that means extraordinary risks and oncein-a-generation opportunities. Miss it, and it’s like building horse-drawn buggies while the world shifts to cars.

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My new book, Principles of Transition Finance Investing: Finding Alpha in a World Adapting to Climate Change reframes climate finance not as a matter of “being green,” but as a question of competitiveness, capital flows, and survival.

Why This Book, Why Now Throughout history, disruptive transitions have defined markets.

Those who embraced new technologies thrived; those who resisted were left behind. The automobile, electricity, and the internet all redrew the economic landscape.

Today, the transition to a warmer world is reshaping energy, transportation, agriculture, manufacturing, and finance itself.

The book draws on my experience at Citibank, where I developed the models used to manage more than $730 billion in Wholesale Credit and Commercial Real Estate portfolios.

That role was a masterclass in how to quantify and manage systemic risk at scale. The lesson I carried forward is simple: if you don’t measure risk, it will manage you.

Climate transition is the ultimate systemic risk. But it’s also the ultimate investment opportunity.

Beyond ESG: Why Transition Finance Traditional ESG frameworks, while useful, often miss the real story.

They can be backward-looking, compliance-driven, and overly focused on labels. What investors need is a forward-looking lens that captures the dynamics of adaptation and transition.

Transition finance offers that lens. It highlights where industries are being forced to adapt - and where capital should flow to capture alpha.

It’s not about virtue signaling. It’s about anticipating disruption, positioning for resilience, and allocating capital to the companies and strategies most likely to thrive.

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If risk management is not moving at the speed of innovation, it will become irrelevant.

Winners, Losers, and the Next Frontier In the book, I explore how every sector faces a binary choice: adapt or risk obsolescence. Some will be transition winners - firms reengineering their models for resilience, efficiency, and innovation. Others will be laggards, clinging to outdated paradigms, effectively investing in buggies while the market moves to cars.

For example: Buildings: Inefficient properties risk becoming stranded assets under tightening regulation, while energy-efficient retrofits and smart management systems are poised for explosive growth.

Energy: Beyond wind and solar, underexplored areas like geothermal and advanced storage hold immense potential for investors who act before markets become crowded.

Agriculture: As equatorial farmland loses productivity, northern latitudes such as Canada, Scandinavia, and Russia are emerging as the next agricultural frontier.

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These are not distant scenarios. They are investable opportunities today - and they are unfolding faster than many realize.

Practical Frameworks for Investors What makes this book distinct is its emphasis on frameworks rather than anecdotes. Each chapter provides structured tools to evaluate opportunities and risks across sectors, addressing questions such as: Is the technology mature enough to invest in now, or still years away? How crowded is the market, and where are valuations stretched? What policy or regulatory triggers are activating investment flows? How can portfolios capture upside while hedging systemic downside?

These are the questions that serious asset managers, corporate leaders, and policymakers need answers to - and they form the backbone of Principles of Transition Finance Investing.

Why It Matters The numbers are staggering. Each year, trillions of dollars are being redirected toward adaptation and decarbonization. Governments are reshaping entire industries with policy and incentives. Supply chains and consumers are demanding new standards of resilience and sustainability.

For investors, ignoring transition finance isn’t neutral. It’s an active choice - one that risks missing

opportunities and being caught on the wrong side of history.

The challenge is urgent. The opportunities are vast. The winners will be those who see clearly, adapt early, and act decisively.

The book has been written for a broad but focused audience.

It will resonate with asset managers seeking tools to integrate transition dynamics into portfolio construction, corporate leaders navigating how their sectors will be reshaped, policymakers working to understand capital flows and their implications, and entrepreneurs and innovators who view transition as opportunity, not constraint.

Principles of Transition Finance Investing: Finding Alpha in a World Adapting to Climate Change is now on sale at Amazon, Wiley, and Barnes & Noble

So, whether you manage billions or lead a growing business, the frameworks in this book are designed to help you recognize and seize transition opportunities.

Food for Thought The transition to a warmer world is the defining economic challenge - and opportunity of our generation. The question is not whether it will happen.

It’s whether we will adapt fast enough to seize it.

Let’s not be the buggy builders.

Let’s invest in the future.

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NOVEMBER EDITION •

PSYCHOLOGICAL

SAFETY AS RISK

INFRASTRUCTURE Julien Haye is Managing Director of Aevitium LTD and a veteran risk leader with 26+ years in global financial services. He has served as Chief Risk Officer, advises boards on governance, culture and resilience, and champions psychological safety as a foundation for better decision-making.

When risk decisions matter most, uncertainty, pressure, and cultural barriers often prevent weak signals from reaching decision-makers.

In volatile markets shaped by shifting regulation, geopolitical shocks, and fast-moving technology, these blind spots quickly compound into crises.

This is the central theme of my book The Risk Within, which positions psychological safety not as a cultural aspiration but as infrastructure for effective risk management.

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When people feel safe to speak candidly, challenge assumptions, and raise concerns without fear, early signals are surfaced and decisions improve under pressure.

What the Evidence Shows Recent polling of more than 2,000 professionals and dialogue with more than 100 risk leaders confirm that human decisions, cultural adaptability, and structural clarity determine whether risks are surfaced and acted upon when uncertainty is at its peak. More specifically:

Leadership support.

Four in ten said lack of visible leadership backing is the main barrier to psychological safety.

Resistance to change.

More than half highlighted cultural resistance as the strongest blocker to stronger risk practices.

Silence and conformity.

A third pointed to silence in meetings or lack of challenge as clear signals of risk blindness.

Clarity of process.

Almost a third said unclear pathways delay escalation and slow decision-making.

Cross-line collaboration.

Over a third identified collaboration across the three lines as critical to effective visibility.

Psychological safety is not a cultural aspiration, it’s risk infrastructure.

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From Insight to Action Embedding psychological safety into governance design translates intent into outcomes. Six levers stand out:

5. Build cross-line collaboration.

Deliberate integration across the three lines strengthens ownership and reduces blind spots.

What Boards Should Ask Boards cannot assume silence means stability. Five questions bring human factors into oversight:

1. Make leadership support observable.

Leaders should actively invite questions, acknowledge contributions, and close the loop on concerns raised.

6. Reframe assurance as enablement.

Risk and compliance teams add value when they amplify weak signals and coach constructive challenge.

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Where have risk signals decreased in areas of rapid change?

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Which decisions included dissent, and how was it addressed?

Lessons from Reviews Regulatory and independent inquiries reinforce these findings. The UK Parliamentary Commission on Banking Standards noted at HBOS that “warnings were ignored or not escalated.”

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How quickly did the organisation move from first signal to decision?

2. Provide clarity of process.

Simple thresholds and decision routes remove hesitation and speed up response.

3. Treat silence as data.

Periods without escalation in high-change areas are early indicators of suppression, not stability.

4. Equip middle management.

Managers need mandate, resources, and tools to surface risks quickly and credibly.

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The FCA’s review of TSB’s 2018 IT migration highlighted weak governance and limited senior oversight. The Credit Suisse Archegos report concluded that management had multiple signals of risk concentration, but “failures of management and culture” prevented action.

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What leadership behaviours reinforced candour this quarter?

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What lessons were captured from near misses?

Conclusion Resilience under uncertainty is built on the conditions that allow people to speak openly and act decisively.

Embedding psychological safety into governance is essential to capture weak signals earlier, challenge assumptions more effectively, and move from warning to decision with speed.

Small but deliberate changes clear pathways, visible leadership support, structured learning, and cross-line collaboration - turn psychological safety into risk infrastructure.

This is an abridged version of a longer article written by Julien for Connect. If you’d like to read the article in full, head over to our online Connect information hub, and search for our LONG READS section.

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