By virtue of serving on the boards of the most regulated industry in America, bank directors traditionally evaluate risk based on the degree to which errors can be avoided and mistakes eliminated. Risk is managed with rigid operating procedures that allow minimal expectations, require thorough documentation and provide a careful review of errors. Nonbanks vying for a piece of the financial services business operate under a completely different set of risk rules from banks. Mistakes are not only tolerated, they are celebrated. Caution to the Wind Risk is no longer about avoiding mistakes.
Caution is no longer the name of the game.
Missed opportunities and lost revenue streams result from an inability to enter a market fast enough. Banks must learn from the dotcom world that zero risk and speed are incompatible. One of the biggest challenges facing a bank CIO in the e-commerce world is convincing the board to change its traditional view of technology risk. Because the best decisions flow from knowledge, CIOs need to help their CEOs and directors readjust their thinking. But above all, be patient.