White Paper Reveals About Two Thirds of the Institutions Interviewed Are Currently Reviewing Risk Infrastructure to Enhance the Value of Risk Information Across the Business
LONDON, UK — Half of senior risk executives interviewed at leading banks believe that capturing and processing risk information across their enterprises is currently inadequate. Additionally, seven in 10 financial institutions sampled* acknowledged that they are currently reviewing their risk infrastructure to better understand risk information, according to a White Paper by IDC Financial Insights sponsored by Sybase, an SAP Company (NYSE: SAP) and industry leader in enterprise and mobile software.
Based on interviews with senior risk executives from tier one and tier two financial institutions, the White Paper examines the role of the risk function in optimising the effectiveness of capital allocation and consumption at all levels of a financial institution.
Rachel Hunt, Head of EMEA IDC Financial Insights commented: “In recent years the banking industry has paid lip service to the importance of the risk function; however, the White Paper shows that now the Chief Risk Officer is being empowered to deliver a more proactive strategy that is focused on value creation rather than simply managing financial risk in arrears. The challenge with playing such a pivotal role is the pressure on risk management performance has intensified.”
“While senior risk executives are required to play a more strategic role and drive capital opitmisation in the post-crisis world, they are in danger of being undermined by a restrictive legacy technology that severely impedes the value of risk information. Forward looking firms will invest in risk data infrastructure to ensure that high quality risk data is consistent and available throughout the organisation,” said Stuart Grant, Financial Services Business Development Manager at Sybase, an SAP Company.
According to the White Paper, eight out of 10 view the risk management role as a strategic partner to the board, whilst seven out of 10 cited its importance in driving strategy across the business. Once a reactive tool, the risk management paradigm is evolving to take on a decidedly more proactive approach that creates value. The front office faces strict internal mandates to take responsibility for the risk it originates. While a few banks are able to refresh this type of information intra-day, real-time updates delivering value to the business are viewed as a distant prospect. Many institutions are still forced to accept trade-offs between timeliness, reliability and completeness of analysis when it comes down to risk, liquidity and capital information.
“In the coming months and years, risk management has the opportunity to cement its recently attained status as the core of a financial institution. However, this will require material investments of time and money to bring the risk information and analysis capability to a level of implementation commensurate with the demands of today’s world,” Grant added.
Note to editors:
* Interviewed sample includes 8 of the largest 20 Western European banks by asset size.
Tier 1 banks are those with assets greater than US$100 billion on their balance sheets. Tier 2 banks are those with assets between US$10 billion and US$100 billion of on their balance sheets.
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