The results of a global survey conducted in July 2008 by the Economist Intelligence Unit on behalf of SAS, the leader in business intelligence (BI) and analytics, gained insight into enterprise risk management strategies.
Executives now appear to be paying attention, with 59 percent of survey respondents saying the credit crisis has prompted them to scrutinise their risk management practices in greater detail. In anticipation of closer scrutiny from regulators, many institutions are revisiting their risk management practices. In addition, recent reports by the Financial Stability Forum (FSF) and the Institute for International Finance (IIF) are now calling for closer scrutiny of the risk management process.
TowerGroup analyst Rodney Nelsestuen agrees. âEnterprise risk management has taken on new importance as stockholders, boards of directors and regulators demand better, more timely analysis of risk and a deeper understanding of how the institution is impacted by the dynamic risk environment of a global financial community.â
Survey respondents identified several challenges such as data and company culture, which have affected the implementation of comprehensive risk approaches. For many executives at financial services firms, access to relevant, timely and consistent data is a major obstacle. In addition, almost half of the respondents believed fostering a culture of risk management was the most widely encountered challenge.
Firms participating in the survey are recognising that successful integrated risk programs go beyond quantitative benefits. In areas such as credit and market risk, an integrated approach can efficiently allocate capital and provide better loss containment; it also serves as a form of protection against a damaged reputation.
âThis survey is evidence that the risk management needs of financial institutions are evolving to go beyond regulatory risk and must break down traditional risk silos to drive toward a firm-wide risk view,â said Alastair Sim, Global Director for Risk, SAS.