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Mardi 3 Juillet 2012

Ernst & Young reports risk managers have increased influence

A new survey by E&Y* of risk management at US asset management firms has some interesting conclusions. But how indicative are they of general conditions?

Ernst & Young reports risk managers have increased influence
The survey was limited to risk managers at over 40 leading firms (which I assume means less than 50), so this is (a) a small sample, (b) limited to one industry, and (c) only includes firms with a risk management function.

Even so, the results are interesting.

E&Y leads with the assertion that “the buy-in for the risk management function has occurred”. If true, that is good news. But I am personally not persuaded that it is true across all industries.

The authors then share the bad news – and it is really bad news. “Many risk managers say they are:
- under-resourced,
- lack a clear mandate for the function, and
- do not manage to a budget or measure the entire function’s success.

“These factors contribute to the possibility of risk managers being ill-equipped to deal with major issues, such as the shifting regulatory landscape, which can hinder growth and the opportunity to improve the organization.”

On the positive side, 96% say their influence is increasing, and both management and the board are receiving and using risk-related information.

85% of the risk managers said they needed a greater investment in technology (something I truly understand, having tried to run risk management using spreadsheets in a prior life).

The greatest challenge was the advent of new regulations, but formalization of the risk management function is a problem for 27%. 20% were struggling to demonstrate the value of risk management.

I share E&Y’s concern that few of the risk managers seem to be paying attention to strategic and compliance risks. This may reflect a traditional (and misguided) focus that is limited to assessing risk in the financial portfolio instead of true enterprise-wide risk management.

* www.ey.com/US/en/Industries/Financial-Services/Asset-Management/2012_US_asset_management_risk_survey

What is your opinion?

My thanks go to E&Y, who not only sent me the link to their report but permission to reproduce the infographic below.

Norman Marks, CPA, is vice president, governance, risk, and compliance for SAP's BusinessObjects division, and has been a chief audit executive of major global corporations for more than 15 years. He is the contributing editor to Internal Auditor’s “Governance Perspectives” column.

Ernst & Young reports risk managers have increased influence

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