Financial reforms remain threatened by
an imbalance of risk management demands and actual programmes and
practices in place – despite lessons learned from the economic
crisis, according to a report from business analytics vendor,
SAS.
Risk cultures are ill-prepared for
current demands and have been overtaken by competing priorities
that encourage growth and profitability without embedded risk
strategies, the SAS report found.
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This ill-preparedness exists although financial institutions
initiated some risk management measures to address deficiencies
exposed by the financial crisis.
Firms have seen increased risk appetites with pressure to expand
and boost profits because of the cautious overall recovery and
recent strong performances in the financial sector, SAS said.
The respondents in the report said they struggled to manage
risk, with more than three out of five citing growing complexity in
their organisations’ risk exposures.
Two-thirds of respondents of the
survey, released on 15 June at the SAS-sponsored Premier Business
Leadership conference in Antwerp, said external risks pose a
greater challenge to their institutions than internal ones.
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By GlobalDataYet only 52% said that their risk
management processes are well placed to deal with this volatility
and complexity.
Risk management momentum
peaks
The momentum of revamping and
strengthening risk management may have peaked since the percentage
of respondents is the same compared to last year.
The respondents were questioned
about confidence in having a clearly defined risk management
strategy.
Year on year, the proportion of
respondents who are increasing investment in the risk function has
fallen slightly across IT, data, training and recruitment.
Silos continue to hamper risk
management progress. Although the risk function has been elevated,
organisations still lack strong and open relationships between the
risk function and lines of business, which need the most
improvement.
Respondents cite poor communication
between departments as a major barrier to effective risk
management.
A similar report 12 months ago cited
future regulation as the biggest concern.
