Economist Intelligence Unit: improved risk management among financial institutions, yet challenges remain

The results of the EIU survey show that only 20 percent of financial institutions feel they have integrated risk awareness into their corporate cultures, with just 15 percent making substantial improvements toward implementing or enhancing comprehensive, enterprise-wide risk management systems.

Despite the need for more integrated risk awareness throughout their organizations, financial institutions are keenly aware of risks surrounding the evolving regulatory environment. In fact, nearly half (49 percent) consider dealing with increasingly complex regulatory pressures as their top risk management priority. Interestingly, a significant number of respondents say growing scrutiny from several different regulators is more burdensome than the actual regulations and associated costs for implementation.

Ongoing Challenges and Obstacles

When asked what the obstacles are to dealing with key risks, 42 percent of the respondents said not having enough people and time; 24 percent indicated a lack of appropriate skills, and roughly 25 percent pointed to inadequate funding.

Regional Disparities

According to the survey, perception of risk varies considerably by global region, with North American businesses attributing less importance to nearly every category of risk compared to their peer organizations.

For example, when asked to rank the importance of global economic instability, only one-third (33 percent) of North American respondents listed it as a top-three risk compared to nearly half in both Europe (48 percent) and the Asia-Pacific region (47 percent). Additionally, North American institutions are about half as likely (20 percent) as their European (37 percent) and Asian (45 percent) counterparts to consider reputational risk a top priority.

Titled “Restoring Confidence: Risk management capabilities in the wake of the financial crisis” and conducted by the Economist Intelligence Unit (EIU), the report surveyed 350 senior-level executives at financial institutions across the globe about the state of risk management following the financial crisis.