Fi n d in g s a t a Glanc e
Overview The 2009 report, After the Storm:
A New Era for Risk Management in
• Confidence levels are high, but there is The Economist Intelligence Unit con- Financial Services, found that the major-
a risk of complacency. ducted a global survey on behalf of SAS ity of financial institutions have been con-
to examine how the world’s financial insti- ducting wholesale reforms to the way
• The focus on regulatory compliance
tutions are reinforcing their risk manage- that they manage risk. If anything, the
may distract attention from
ment capabilities in response to the pace of change has accelerated since
emerging risks.
global financial crisis. The online survey, then, with institutions reappraising their
• A clearly defined risk strategy is in place conducted in February 2010, attracted corporate governance structures, risk
at most institutions, but significant 346 respondents – all executives with risk functions, data, IT systems and software,
areas of weakness remain. management responsibilities at banks and business processes and procedures.
and insurance companies around the
• Financial institutions are filling gaps in
world. A series of in-depth interviews with Many banks and insurers have come a
risk expertise with investment in training
industry and risk experts followed the long way in their projects to strengthen
and recruitment.
survey to form the basis of the EIU report. risk capabilities. Discussions about risk
• The silo-based approach to risk This document provides a summary of have become a key part of the board-
management continues to pose the report findings. room agenda, chief risk officers have a
problems. prominent seat at the top table, and there
The financial crisis had many causes, but is renewed zeal for instilling a greater
• Financial institutions continue to
failures in risk management have been awareness of risk principles in the front
struggle with data quality and
clearly identified as a contributory factor. office – the so-called “first line of defense.”
availability.
Although there were technical shortcom-
ings, especially related to risk models and But despite this progress, weaknesses
metrics, a more widespread problem was remain. The enthusiasm for large-scale
a failure of governance, as risk managers’ risk projects has created human capital
legitimate warnings went either unheeded shortages as institutions scramble for the
or unnoticed. In the pre-crash credit bub- appropriate expertise. Data and IT sys-
ble euphoria, a front office-driven culture tems remain significant impediments to
too often rode roughshod over risk man- an overall understanding of risk expo-
agers’ concerns, and many CEOs were sures, while regulatory uncertainty makes
more focused on outperforming revenue it difficult to plan for the long term.
The full report is available at and profit targets while paying little heed
www.sas.com/ermresearch. to growing risk concentrations. The final report – Rebuilding Trust: Next
Steps for Risk Management in Financial
The crisis changed all that. Across the Services – includes the complete survey
industry, risk management has moved to findings along with insights and analysis
the center of strategic decision making, from industry experts and commentators.
and many institutions are revamping their
entire approach to understanding and
mitigating the risks that they face.
Report Highlights
Risk management processes and systems 48%
cial institutions are feeling much more Defining line responsibility for risk management 25%
that prospects for revenue growth over Real-time (or intra-day) risk 9%
the next year are good, whereas 68 per- Others, please specify 2%