Home > Risk > Ernst & Young reports risk managers have increased influence

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?

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:

  1. under-resourced,
  2. lack a clear mandate for the function, and
  3. 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.

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.

  1. June 20, 2012 at 1:43 PM

    As always this is a great post. I also share the concern regarding the lack of focus on risk management and the global strategy. I do believe that there is also an erosion of trust with regarding risk managers. I think better transparency surrounding their processes would help build the trust. I also believe these risks are shared by most organizations and most units, not just asset managers.

  2. June 22, 2012 at 8:24 AM

    I agree a great post and interesting numbers from Ernst & Young. At Symantec, we have found that risk managers – whether they are CIOs or CCOs – who are able to get in front of their fellow executives and board members, and are able to translate IT risk in business relevant terms are more successful at driving effective risk programs and securing the budget need. From the E&Y data reviewed, it is encouraging to see that risk managers’ influence is increasing. I also agree that there is an opportunity for tools- especially those that can help with that translation.

  3. June 26, 2012 at 1:18 PM

    Interesting data from E&Y – it is indeed encouraging…
    but only “slightly more than half have KPI’s in place?” – very telling.

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