Organizational silos, decentralization of resources and decision-making, inadequate forecasting, and lack of transparent reporting were cited as major barriers to effective enterprise-wide risk management. The need to create a risk-aware culture throughout the institution emerged as a top priority in the study -- three-quarters of all respondents cited its vital importance -- as banks struggle to develop a consolidated view of risk across business units and various risk dimensions.
The need for effective enterprise risk management programs is certainly clear not only for financial services companies, but also for non-financial services companies. How effective is your company's risk management program? For a no-cost, diagnostic review of your program, contact Wheelhouse Advisors today.
"Only 14% of the 40 global banks surveyed indicated that they have a solid enterprise risk management program."
ReplyDeleteThis is a major problem. I completely agree that banks must change this. However, with no policy from the government forcing them to, banks won't unless they feel it is 'economic.' And in today's world, who's going to want to spend more money?
You make a great point regarding the economic incentives. Beyond the obvious loss avoidance related to events such as the current financial crisis, some external forces are beginning to emerge. For example, Standard & Poor's has recently adopted an ERM focus in determining credit ratings for both financial and non-financial companies. Not having a true enterprise-wide view of risks will ultimately result in higher credit costs for these companies.
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