Wall Street & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Risk Management

03:17 PM
Connect Directly
Facebook
Google+
Twitter
RSS
E-Mail
50%
50%

Survey Highlights Risk Management In Business Strategy

Accenture's 2013 Risk Management report concludes risk management is more important to C-level executives, and highlights legal risk as a growing concern in capital markets.

Accenture's recently released 2013 Risk Management Report finds capital markets firms are elevating the roll of risk management and incorporate it more aggressively to their business strategies.

To that end, the report found capital markets are deeply focused on developing risk infrastructure, including technology, data, and analytics, over the next two years. The greatest obstacles to those plans were reportedly outdated legacy systems (44%) and lack of system integration (33%).

As Accenture notes, the capital markets are one of few industries to list system issues, rather than human resources issues, as the greatest barrier to development.

Here are some other interesting findings from Accenture's global survey of 446 executives over 7 industries and 2 government sectors:

- 98% of all organizations consider risk management more important than it was two years ago.
- 84% of capital markets firms plan to upgrade risk infrastructure capacity over the next year.
- 89% of capital markets firms rate the importance of their risk organization as important or critical as a means of enabling long-term profitable growth.
- Organizations having a chief risk officer, either with or without the formal title, has risen from 78% in 2011 to a near-universal 96% in 2013.
- 96% of risk management owners now report directly to the chief executive officer.

Coordination

Given that all areas of risk are expect to increase "it's pretty clear," says Steve Culp, global managing director for Accenture Risk Management in a video, "that organizations realize that an effective risk management function must also have a direct line and a voice to the top of the organizational tree"

Chris Thompson, managing director, leads Accenture's Risk Management practice in North America. He said in an interview that there was more collaboration between things like front office responsibilities and risk management. "Of those surveyed, 82% said there's a high degree of coordination. I think that’s real progress" he says. "I think they were very separate from years gone past, but people have been pushed for it and now people are largely there."

According to the report, that coordination between the front office and risk function include working from the same models, with the same data sources and the same calculators.

Meeting Risk Amid Technology Challenges

For Thompson, one of the more noteworthy takeaways is the prevalence of legal risk. At 60%, legal came in as a top external pressure executives see rising over the next two years, followed by business risk, credit, and regulatory risk. 83% of the banking respondents expected legal risks to rise somewhat or significantly over two years.

"Not surprisingly," reads the research report, "the other main area where respondents want to build capabilities is in risk data and technology. Only one percent of respondents claim they have achieved mastery here." 84% of capital market firms said they planned to make changes in the next 12 to 18 months.

Half of respondents criticized management for lack of integrated response to regulatory reform, says Thompson who adds that they see this on the ground with clients. "We have one client building out a FATCA solution but in the bank there’s another way of thinking about on-boarding customers... A lot of money is being spent on this, but it's a complex global institutions and spending money efficiently is hard." To that point, 50% of respondents were critical about architectural challenges.

[To learn more about improving the end-user experience, register for Interop here and check out the “Case Study: Major Online Brokerage Combines People, Process, and Technology to Improve End-User Experience” session on October 3 in NYC.]

Becca Lipman is Senior Editor for Wall Street & Technology. She writes in-depth news articles with a focus on big data and compliance in the capital markets. She regularly meets with information technology leaders and innovators and writes about cloud computing, datacenters, ... View Full Bio

Register for Wall Street & Technology Newsletters
Video
Inside Abel Noser's Trading Floor
Inside Abel Noser's Trading Floor
Advanced Trading takes you on an exclusive tour of Abel Noser's New York trading floor, where the agency broker known for transaction cost analysis, is customizing algorithms for the buy side, while growing its fixed income trading and transitions business.