GLOBAL- Despite the talk about the increased need for risk management in light of the financial turmoil, most asset managers have not done enough to increase their risk management capabilities, a recent study found.
SimCorp said that risk management has dropped in the organizational hierarchy, with the number or firms reporting their risk management activities to the board of directors dropping five percentage points to 31% since the start of the financial downturn in 2007.
Reporting has instead moved down the line to the senior management level, and that is not expected to change.
However, two-thirds of the respondents said "the need for increased strategic influence of the risk function was…the most important factor to effect an improvement in risk management… This implies a call from respondents for support from the most senior officers within the organisations."
Regardless, 58% of those surveyed said the role and responsibility of the risk function has been extended and most expect staff and staff competencies in risk management to be boosted in the future.
Most respondents said improvements in risk management going forward will have to come from beefing up internal capabilities, as opposed to hiring external consultants. Also, about one-third said regulators served as a firm's "primary risk management advisor."
The report said: "It seems fair to assume that at least part of the industry anticipates their regulators will drive future development when it comes to risk assessment models and methods."
SimCorp interviewed 90 risk managers in February and March.
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