Credit crunch is a risk management cultural failure

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LONDON – Better risk management would have lessened the effects of the credit crisis, according to a new study. The survey, conducted by the Economist Intelligence Unit on behalf of risk management software firm SAS, says firms are now revisiting their risk management practices in the wake of the market turmoil.

Over 70% of respondents believed losses and writedowns stemming from the credit crisis were largely the consequence of failure to address risk management issues. The survey was conducted globally with 316 financial services executives.

Almost 60% of executives said market events had caused them to scrutinise their risk management, partly in expectation of tighter regulation. The study also claims firms are demanding more holistic enterprise-wide risk management programmes.