Collateral a bigger priority for risk managers
02 September 2014 Michigan
Image: Shutterstock
There is an attitudinal shift among risk managers, according to a global survey by the Professional Risk Managers’ International Association (PRIMA) and SunGard.
The survey shows risk managers are now increasingly viewing risk management as a strategic core competency rather than just a regulatory obligation.
With over 200 banking risk managers across the world taking part, key findings show stress testing capabilities ranked as a lower than expected priority, behind collateral consideration and asset and exposure valuation.
In addition to stress testing, the calculation of regulatory limits exposures also ranked as a lower than expected priority.
Over 96 percent of respondents confirmed that combined credit risk and collateral management capabilities were important, further highlighting how firms are increasingly taking a more long term view of risk management.
The survey also shows other priorities for risk managers included centralisation of customer information to drive increased accuracy, improved monitoring of counterparty risk, enhanced reliability of risk data and better single borrower exposure and monitoring limits.
Sven Lugwig, regional director of PRIMA and senior vice president, risk management and analytics of SunGard, said: “These key findings highlight an important step change for the industry. While it is surprising that regulatory requirements such as stress testing rank as a lower than expected priority, this also suggests that the practice of risk management is evolving to become more strategic and operational.”
“This is particularly evident when looking at today’s collateral and exposure management priorities. Taking a longer-term view towards risk will undoubtedly enable banks to successfully navigate the more complex regulatory landscape, but also lay the foundations for an effective risk strategy which drives competitiveness from compliance.”
Jochen Schneider, COO of SunGard’s retail banking business, said: “Collateral is one of the key focal areas to mitigate systemic risk. Strategic investments here can improve all three levels of shareholder value: revenue enhancement, cost containment and capital efficiency.”
“More specifically, banks that improve their collateral and exposure management capabilities can more effectively manage lower interest rate risk and therefore enjoy higher equity leverage. We see a continued focus among banks on enhancing these capabilities, as they increasingly recognize their importance in helping to better manage risk in the long-term.”
The survey shows risk managers are now increasingly viewing risk management as a strategic core competency rather than just a regulatory obligation.
With over 200 banking risk managers across the world taking part, key findings show stress testing capabilities ranked as a lower than expected priority, behind collateral consideration and asset and exposure valuation.
In addition to stress testing, the calculation of regulatory limits exposures also ranked as a lower than expected priority.
Over 96 percent of respondents confirmed that combined credit risk and collateral management capabilities were important, further highlighting how firms are increasingly taking a more long term view of risk management.
The survey also shows other priorities for risk managers included centralisation of customer information to drive increased accuracy, improved monitoring of counterparty risk, enhanced reliability of risk data and better single borrower exposure and monitoring limits.
Sven Lugwig, regional director of PRIMA and senior vice president, risk management and analytics of SunGard, said: “These key findings highlight an important step change for the industry. While it is surprising that regulatory requirements such as stress testing rank as a lower than expected priority, this also suggests that the practice of risk management is evolving to become more strategic and operational.”
“This is particularly evident when looking at today’s collateral and exposure management priorities. Taking a longer-term view towards risk will undoubtedly enable banks to successfully navigate the more complex regulatory landscape, but also lay the foundations for an effective risk strategy which drives competitiveness from compliance.”
Jochen Schneider, COO of SunGard’s retail banking business, said: “Collateral is one of the key focal areas to mitigate systemic risk. Strategic investments here can improve all three levels of shareholder value: revenue enhancement, cost containment and capital efficiency.”
“More specifically, banks that improve their collateral and exposure management capabilities can more effectively manage lower interest rate risk and therefore enjoy higher equity leverage. We see a continued focus among banks on enhancing these capabilities, as they increasingly recognize their importance in helping to better manage risk in the long-term.”
NO FEE, NO RISK
100% ON RETURNS If you invest in only one asset servicing news source this year, make sure it is your free subscription to Asset Servicing Times
100% ON RETURNS If you invest in only one asset servicing news source this year, make sure it is your free subscription to Asset Servicing Times
