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Understanding the 2026 Risk Landscape for Banks

As the banking sector navigates through 2026, the rapidly advancing landscape of artificial intelligence (AI) presents both opportunities and formidable challenges. According to the recent 2026 Risk Survey, conducted by Bank Director, a leading resource for financial institution leaders, an overwhelming majority of bank executives express heightened concerns regarding fraud, cybersecurity, and the intricacies of AI governance.

Key Insights from the Survey

The survey, backed by Baker Tilly, highlights that 79% of bank executives, including CEOs and board members, categorize fraud as their top concern for the year. Furthermore, 84% of respondents worry specifically about AI-related fraud or scams targeting customers, while 77% express similar concerns regarding threats to their internal organizations. The competitive environment is also evolving, with 38% of participants indicating apprehension about competitive threats from both traditional and non-banking financial institutions.

The Need for a Strong Foundation

The survey results indicate a dual reality among bank leaders when it comes to their understanding of AI. While most acknowledge baseline knowledge on topics such as machine learning and data governance, one-third of respondents admitted they do not understand agentic AI—a form of AI that focuses on autonomous decision-making. This gap in understanding could pose serious governance challenges, as highlighted by Mark Wuchte, Baker Tilly’s financial services risk advisory leader, who emphasizes the importance of foundational knowledge in ensuring responsible AI usage across banks.

Heightened Risk Awareness and Strategic Concerns

Compounding the anxieties surrounding AI, executives are also grappling with the evolving competitive landscape. 42% of survey participants ranked strategic risk as a primary concern for 2026, a notable increase from 30% the previous year. This worry is inflating due to fintechs aspiring to bank charters and the evolving services offered by existing institutions. Emily McCormick, a vice president at Bank Director, noted that the apprehension about market share threats is an expected response to the broadening financial services landscape driven by technological advancements.

Regulatory Landscape and Cybersecurity Oversight

Interestingly, regulatory risk has diminished in importance, with only 28% of the surveyed executives citing it as a primary concern, down from 55% in 2025. In this latest review cycle, 44% reported increased scrutiny on liquidity planning during regulatory examinations. Meanwhile, cybersecurity remains a crucial focus amid the rising threat landscape—89% of CEOs and tech executives confirmed their banks conducted tabletop exercises to assess their cybersecurity incident response plans, while gaps in internal communication were a prevalent concern.

Addressing Credit Risk in Banking

Credit risk is another area of growing concern, with 60% of respondents identifying it as a major risk, rising from 51% the previous year. As issues like credit quality and concentrated loan portfolios come under closer scrutiny, the banking sector is forced to reevaluate its risk management strategies.

The Evolution of Risk Responsibility

As banks begin to comprehend the emerging challenges, the role of the Chief Risk Officer (CRO) has become more prominent, with 54% of institutions employing one. Among those, a significant 81% of CROs report directly to the CEO, signaling a shift towards more integrated risk management practices. Regular interactions with the board underscore the pressing need to align risk oversight with the strategic goals of financial institutions.

Conclusion: Preparing for an Uncertain Future

The findings from Bank Director's 2026 Risk Survey illuminate a pivotal moment for banks as they confront the realities of AI, cybersecurity, and evolving market dynamics. Achieving a comprehensive understanding and governance framework around these technologies will be essential for banks aiming to mitigate risks effectively while capitalizing on the technological advancements that AI offers.

For a deeper dive into the survey results and further insights, visit BankDirector.com.