Meet City National Bank’s Risk Management Guru: Risk All Star Marcelo Brutti

As chief risk officer for a rapidly growing financial institution, Marcelo Brutti banked on clear communication, tested processes and a culture he knew he could believe in.
By: | July 25, 2022

After stints at Visa, Hyundai, Santander and Wells Fargo, Marcelo Brutti wasn’t exactly a risk management novice as he considered taking the chief risk officer’s position at City National Bank, the Royal Bank of Canada subsidiary.

But if Brutti was going to manage risk for what was then, in 2019, a $51 billion in assets enterprise, he knew he had to trust the company’s culture if he was going to upgrade and revamp its risk management processes so that it could grow unimpeded by bureaucracy.

“Culture was one of the key points of focus as I went through the interview. Because if you don’t have the right culture locally and globally, then it’s extremely difficult, if not impossible, to do what we have done,” Brutti said.

And what have Brutti and his colleagues done as City National Bank grew from $51 billion in assets to more than $90 billion in assets three years later?

Brutti’s team executed an overhaul of its IT risk management, BSA/AML (anti-money laundering systems), operational risk management, reputational, compliance and regulatory risk management, among others.

No small feat.

But all of this had to be done without strangling the bank’s growth engine.

“I wanted to put a program in place that would enable sustainable, responsible growth without, as we say, ‘crushing the butterfly,’ ” Brutti said. “We put all of these risk management infrastructure controls in place to ensure that we are within our risk appetite, that we are meeting expectations, that we have all the right controls, but it has to be done in the right way, because if not, it becomes bureaucratic.”

Brutti also relied on a management and interpersonal style that places an emphasis on collaboration and communication.

“I could impose on people what I know they have to do, but that’s not my style,” Brutti said. “I’d rather explain to them what they have to do, why they have to do it and the benefits they’ll realize.”

Brutti and his team also needed to function amidst the uncertainty that supply chain issues, a war in Europe, inflationary pressures and a global pandemic have brought to national and global economies.

What Brutti and his team call their three lines of defense against risk and uncertainty are, one, the risk and compliance teams within the bank’s business units. The second line of defense is his risk management team, which is referred to as “independent risk management.”

“We are independent from the first line. We create the standards. We enforce the risk appetite mandates from the board, across all risk categories, to ensure that all of the different teams, the different divisions, are doing what they are supposed to be doing, and opertaing within our risk appetite,” he said.

The third line of defense is audit. “That’s audit before anything goes out of the bank, be it a report, let it be numbers, whatever that might be,” Brutti said. Good risk management at City National Bank also means putting in place the infrastructure to allow for future growth with a minimum of credit and other losses.

“You have to stay ahead of it,” said Brutti. “Because if you’re lagging, you are too late.” &

Every year, Risk & Insurance selects deserving candidates to become Risk All Stars. These are risk managers who, through their perseverance, passion and creativity, make a big difference to the stability of their organizations.

See all the 2022 Risk All Star Winners here.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected].

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