Risk cultures are ill-prepared for current demands and have been overtaken by competing priorities, says report
Risk management in financial firms is being sidelined again because companies are too focused on profits and growth, according to a new survey.
The survey by the Economist Intelligence Unit (EIU) found that pressure to expand and boost profits in the financial sector has not been matched by improvements in risk management procedures.
“While financial institutions initiated some risk management measures to address deficiencies exposed by the financial crisis, risk cultures are ill-prepared for current demands and have been overtaken by competing priorities that encourage growth and profitability without embedded risk strategies,” said the EIU.
This despite the fact that financial firms are facing an increasingly complex operating environment. Three out of five respondents to the survey cited a growing complexity in their organisations' risk exposures.
Respondents cite poor communication between departments as a major barrier to effective risk management. However, according to the survey management boards have increased both their risk expertise and their demand for risk reporting.
David Rogers, global product marketing manager for risk at SAS, who sponsored the survey of 315 global executives, said: "To take its necessary place at the executive and board level, risk management must evolve from a technical support function to a strategic process."
For the full report click here.
For more analysis on the report: Financial sector risk is still lagging