SunGard Survey Cautions Against Reactive Risk Management

A new risk management study from SunGard finds that a short-term view with regards to risk management priorities impacts a bank’s competitive advantage and profitability.

C-level and management concerns towards risk and regulations appear to be reactive and short-term, said the research, which surveyed 760 risk professionals across 60 countries. Nearly 30% of respondents are concerned with current regulatory and economic uncertainty, as opposed to concerns about in-house risk management expertise and cultural challenges in aligning the front line with risk-taking goals, which are among the lowest at approximately 7%.

Changing priorities also suggest reactive risk management planning: Only two of 10 risk priorities maintained the same ranking compared to last year, liquidity risk management and risk appetite framework. Economic capital fell from the top priority last year to number eight this year. The top four 2013 global risk priorities are liquidity risk management, regulatory capital adequacy, credit portfolio optimization and risk appetite.

Ville Ahonen, credit risk manager of Aktia, said: “These findings highlight an industry-wide need for banks to view risk management in a long-term context and embed a proactive and strategic approach into the culture and operations of the entire organization.”