Institutions still fall short on risk management

As financial institutions raise their focus on risk management, most still consider their assessments of risk to be insufficient, according to Deloitte’s global risk management survey.

Only 47% considered their institution very effective in managing business continuity/IT security risk. Operational and vendor risk yielded 43% each, and geopolitical risk 35%. This compares with 70-80% for their ratings of market, credit and liquidity risk.

Only 35% of executives reported that their institutions had already implemented an ERM programme, while almost a third (32%) are in the process of establishing one. Where ERM programmes have been created, executives have reported they yielded benefits.

Of companies with ERM initiatives, 75% of executives said the total value of their programmes had exceeded the costs. However, this assessment of value is largely qualitative, as only 4% of executives said their institutions quantify the benefits of their ERM programmes.

“While progress in the area of risk management has been real, a great deal more needs to be done,” said David Myers, investment banking partner at Deloitte in London.