Financial institutions demand risk management overhaul

14.05.2009
A survey of 334 financial executives worldwide has found that the majority lack confidence in policy makers' ability to draft appropriate responses to counter the current economic crisis.

Results showed only a third of respondents believe the current principles of risk management in the financial services sector are stable.

The survey, conducted in March 2009 by the Economist Intelligence Unit and commissioned by business analytics software vendor SAS, studied the attitudes of financial executives regarding enterprise risk management.

More than half of the survey's respondents said they had either already conducted, or plan to conduct an overhaul of their enterprise's risk management strategy. The overhauls include improvements to the quality and availability of data, stronger risk governance and a greater inclusion of risk within the various sectors of the enterprise.

"Although technology is not to blame for the widespread financial crisis, rigid technology and business processes have undoubtedly made it difficult for many financial services institutions (FSIs) to respond rapidly and effectively to the financial crisis," said Virginia Garcia, senior research director, Tower Group. "This situation reinforces the business case for a more agile and intelligent enterprise architecture to mitigate risk by helping FSIs to adjust to volatile business dynamics."

Respondents expressed a need for greater transparency within the institution, including greater disclosure of off-balance-sheet vehicles, stronger regulation of credit rating agencies and central clearing for over-the-counter derivatives.