The survey also found that most managers, 82%, agreed that awareness of risk is now more pervasive in their organisations than it was two years ago, while 73% agreed that their organisations define their appetite for risk more clearly.
But PwC and the Economist Intelligence Unit also found that risk management remains primarily focused on meeting regulatory requirements and only secondarily on protecting and enhancing the “value of the franchise”.
“Financial institutions have made significant strides since our last risk management survey two years ago, but our latest findings reveal that too many organisations are still concentrating on calculating market and credit risk to a further order of accuracy, and too few on understanding the totality of the risks they face in order to give themselves a competitive advantage,” said PwC’s Phil Rivett, global leader of the banking and capital markets group.
He added: “In an environment where new and potentially lethal risks can suddenly emerge, institutions need to look at the bigger picture. They need to seek to anticipate and avoid the submerged risks that can abruptly sink an enterprise and have both the crisis management processes in place and the underlying standards of behaviour that are likely to soften the impact of such risks when they do come to pass.”
The survey also found that 24% of respondents felt their institution was ineffective in dealing with reputational risk – only 16% of respondents said they quantify intangible risks.
“Financial institutions are increasingly attuned to the dangers posed by less quantifiable risks but they need to turn their good intentions into action,” said Rivett.