In the latest episode of the 'Ganado Meets Finance' podcast, Catherine Formosa Senior Associate at Ganado Advocates, speaks with Joyce Grech, Head of Commercial Banking and member of the Executive Committee of HSBC Malta on a range of topics including risks and challenges faced by banks, the current environment for Maltese corporates, sustainability and ESG as well as female participation in senior positions.

During the initial part of the podcast, Joyce Grech takes the listeners through the various experiences which made up her career at HSBC Malta over the years, culminating in two important roles, that of Chief Risk Officer and her current role as Head of Commercial Banking. Despite working within the same organization, Joyce Grech believes she had the opportunity to grow and experience banking from different perspectives.

The discussion delved into the role of risk managers within banks and other financial institutions which has changed dramatically in line with the broadening of the risk taxonomy and risk becoming an enterprise-wide concept. Joyce Grech described how risks within banks evolved from typically being labelled only as "credit risk" or "market risk". Today's risk managers need to adapt to and appreciate the breadth of the risks of the institution, look beyond the present and be also subject matter specialists. The focus of the risk unit within the organization can literally change from one day to the next.

Joyce Grech emphasized how identifying and understanding one's risks provides opportunities to manage and improve one's chances of success. The everchanging regulatory environment, people risk resources, cyber security risk and climate change risk are amongst the most notable risks faced by banks. Although it may not be immediately evident, climate change risk impacts banks in other areas such as credit risk, reputation risk and business continuity. Nonetheless, in every risk there are also opportunities. Joyce Grech also spoke about being employed in a customer-oriented role versus being involved within the risk function which at face value may appear to be two roles on different ends of the spectrum. Within the risk sector, the challenge is keeping the customer in mind when setting the risk appetite and in taking decisions as to how to mitigate against the relative risks.

Joyce Grech described what she considers the primary challenges faced by Maltese businesses within the current complex environment, particularly those caused by the lingering effects of the pandemic and the war in Ukraine. She noted how disruptions in supply chains, increases in prices and reduction in capacities induced businesses to revisit their business models to address, amongst others, impact on cash flows, working capital requirements and trade cycles. Having an element of contingency inbuilt into processes and being agile are key. Additionally, against a background of regulatory demands which banks may have to pass on to their customers, the role of a bank is to, as far as possible facilitate processes for their customers particularly, through technology. One area which adds further pressure on both banks and customers is in fact regulatory reporting relating to ESG. Banks have duties to report exposures and they need to obtain certain information from their customers.

Joyce Grech discussed the issue of sustainability and recognizes that the attitudes and the level of preparedness towards this challenge differ from one business to another, something which is also evident worldwide. It is critical for businesses to look beyond short to medium term gains – sustainability will catch up with everyone and will result in pressures from consumers, suppliers, regulators and governments. Banks have a role to play not only by assisting customers in transitioning to green sources of energy or in customers' sustainability initiatives through products, solutions, knowledge and expertise sharing but also in raising awareness to the risks if action in this field continues being postponed. Ultimately, the future growth of banks themselves will also be in part impacted by their ability to support and encourage sustainability related business strategies.

The final part of the podcast touched upon female participation, in the boardroom or at senior management levels, an area about which Joyce Grech feels strongly. Joyce Grech gave her views about the level of local participation by women in senior roles and considers that banks should be at the forefront of this area, not only because regulators are focusing on diversity in its various facets but also because of the real benefits which diversity can bring to an organisation.

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