Development Banks Face Higher Risk Appetite Breaches Than Commercial Lenders
A new survey reveals that multilateral development banks (MDBs) are significantly more likely to exceed their risk appetite levels compared to traditional commercial banks, signaling a potential shift in strategy to mitigate growing risk exposure.
Multilateral development banks (MDBs) exceeded their risk appetite levels more than twice as much as other banks, according to Risk.net’s latest Risk Benchmarking survey. The data indicates that 37% of development banks reported breaching their risk appetite in the past 12 months, a stark contrast to the 15% reported by commercial banks – specifically, global systemically important banks (G-Sibs).
This heightened risk-taking among MDBs may be indicative of a broader trend toward adapting services or overall strategy to reduce risk exposure. According to the survey, development banks are increasingly proactive in adjusting their approaches to navigate a complex and evolving global landscape.
The findings underscore a growing divergence in risk management practices between these two types of financial institutions. While G-Sibs operate under stringent regulatory frameworks designed to maintain financial stability, MDBs often pursue development goals that necessitate a higher tolerance for risk.
Access to the full Risk Benchmarking survey and related subscription benefits is available through Risk.net. Interested parties can contact [email protected] or explore subscription options at http://subscriptions.risk.net/subscribe.
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