As financial services institutions around the world face escalating exposure to risk, a new survey released today finds that Canada and the United States lag behind the rest of the world in their ability and preparedness to deal with increasing risk.
The Deloitte 2004 Global Risk Management Survey is based on interviews with senior executives from the world’s top 162 global financial institutions.
According to Deloitte, factors such as mergers, off-shoring, outsourcing, inadequate risk governance and over-ambitious lending all contribute to escalating risk.
“Financial institutions increasingly recognize that strong risk management governance should be part of the overall business strategy,” said Leon Bloom, Managing Partner, Global Financial Services Industry, Deloitte. “Failure to fully recognize and manage risk will have serious consequences for Canadian corporations in regulatory terms as well as business performance. The inability to deal with risk will ultimately affect an institution’s bottom-line.”
According to the survey, financial services companies worldwide are clearly recognizing the need to effectively manage risk, as evidenced by the significant increase in companies that have established the position of chief risk officer (CRO) — up to 81% in 2004 from 65% in 2002. Despite the global trend, Canada, along with North America, lags behind the rest of the world with only 75% of companies stating they have a CRO.
The survey findings indicate that risk management is increasingly being recognized by senior management as a key component of a company’s overall business strategy, with three quarters of CROs in financial services firms reporting to the chief executive or board of directors.
Deloitte’s fourth biannual survey, which serves as a global benchmark for risk management in financial services firms, contains responses from 162 financial institutions on six continents with assets totaling nearly $19 trillion. The survey sample included responses from 12 financial services sectors in four broad categories: investment banking and related services, commercial banking, integrated financial services, and retail banking. Respondents answered questions which addressed the range of key risk management issues facing financial institutions including: Risk Governance, Economic and Regulatory Capital, Enterprise Risk Management, Credit Risk Management, Market Risk and Asset/Liability Management, Operational Risk Management, Risk Systems and Technology and Extended Enterprise Solutions.
To access the study, please visit: www.deloitte.ca
Canadian corporations falling behind in managing escalating risk
Deloitte releases global risk management survey
- By: IE Staff
- February 28, 2005 February 28, 2005
- 16:15