The importance of modern and integrated risk management

Many financial services firms are still struggling with the business impacts of the financial crisis. A cautious economic recovery, strong regulatory response and weakened public trust have combined to pressure firms to make updates and improvements to processes and technology – notably in the area of risk management.

Firms recognize the need for change. According to a 2011 Economist Intelligence Unit survey of risk managers (on behalf of SAS), firms are finding it difficult to manage risk in an increasingly complex operating environment: Only 51 percent said that their risk management processes are well-placed to deal with this volatility and complexity.

This acknowledged need for improvement is one reason that I was so pleased when The Banker announced that SAS had received The Best Technology Provider for Risk Management Technology award from The Banker’s Innovation in Technology Awards 2012. The winner is selected by banking executives – in fact, 20 CIOs from across the globe.

John Beck, Trading and Technology Editor at The Banker, said "Risk management technology has never been more important. In the wake of the financial crisis, weaknesses were exposed in identifying and dealing with risks across business lines and the firm as a whole, leading many banks to embark upon extensive overhauls of their risk management operations. Meanwhile, a drastic increase in regulatory requirements made comprehensive reporting and monitoring systems a necessity.”

This award shows an understanding by executives of the value they gain by measuring and managing risk through an integrated framework. I also believe this award indicates progress in the industry’s response to risk management since our 2011 survey. These industry leaders see and embrace the need to modernize and integrate risk – within or across risk silos or with other business operations such as finance – especially against the backdrop of regulators and business leaders demanding more robust and timely risk information.

Firms are at an advantage if they harness both business analytics and a risk architecture that gathers the numerous and complex aspects of risk measurement relevant to individual risk silos. The principal drivers of this modern risk management framework are to support a comprehensive and varied view of risk which can evolve with business and regulatory climate changes.

The challenge for all financial services risk functions is to deliver relevant and timely risk measurement and management across the enterprise, from the front line staff to the risk committee managing risk appetite. Take a look at what grabbed the panel’s attention – SAS Risk Management for Banking.

tags: risk management

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