Rethinking IFRS 9 Through a Risk First Mindset

This episode of Risk Leaders Connect highlights the importance of adopting a risk-first mindset when dealing with IFRS 9, rather than treating it as a mere compliance exercise.

Jakob Lavrod emphasizes that effective risk management is the core strength of any bank, and institutions should embed risk awareness deeply into their culture instead of viewing regulatory requirements as boxes to tick. By truly understanding and managing credit risk, banks can improve their resilience and decision-making processes.

A central theme is the idea that lifetime probability of default (PD) should be the starting point for credit assessment, not just a stage two requirement. Origination decisions are fundamentally based on lifetime risk projections, and IFRS 9 should be seen as an updating mechanism for these assessments. This shift in perspective opens up opportunities for more robust credit modeling and better alignment between risk management and financial reporting.