Major financial institutions (FIs) are at least 20 years behind their peers in the aviation sector in their levels of risk management, according to a survey of 25 senior risk officers from the biggest banks and insurers, undertaken by UK advisory firm Corven.
Corven’s poll found that 62% of risk respondents attributed ‘major risk incidents’ to culture, leadership or behaviour, and 91% said that the organisational response to such incidents had been to overhaul processes and systems. It also indicated that as many as 93% of financial institutions have no way of measuring culture or behaviour.
In addition, the poll found that the majority of FIs are more reactive than proactive in managing risk, waiting for an incident to occur or for the regulator to order measures on a particular issue. Sixty-four per cent of respondents said their company had started to improve risk management only when there was intervention from the Financial Services Authority (FSA) or other regulator, and only 4% thought that their company was proactive.
“Rather than wait for problems to occur, the banking and insurance industries should be taking lessons learnt from recent high-profile IT failures and finding ways to proactively re-assess their internal infrastructures in order to avoid such instances from happening again,” said Jane Tweddle, financial services principal at SAP UKI.
“The ‘tick-box’ approach to risk assessment has no place in today’s financial services industry. Instead business insight and intelligence is what’s crucial if processes are to be updated and followed, and a detailed understanding of problems is to be developed.”