Risk management survey reveals areas for improvement
A survey of over 300 senior business people revealed a greater awareness of the importance of risk management after the global financial crisis (GFC).
The online Enterprise Risk Management (ERM) survey was conducted by the Institute of Actuaries a week before its ERM seminar held in Sydney yesterday. It showed that while more than 85 per cent of respondents, comprising senior financial services executives, actuaries and risk managers, revealed a heightened awareness of risk management, they still saw weaknesses in a number of risk management areas.
Some 60 per cent said the area of most improvement was reporting at board level, 50 per cent stated the greatest improvement was in risk governance processes and 50 per cent stated that the risk culture had changed and people were more likely to speak up about possible risks.
“It’s pleasing to see corporate Australia has responded to risk management issues raised by the GFC with improvements in reporting at board level and in risk governance processes where risk indicators are more consistently measured, stress tested and reported,” said the Institute of Actuaries chief executive, Melinda Howes.
She added, however, that there is still work to be done in various areas.
When asked what risk management areas were still most lacking at their own or clients’ companies, 49 per cent of respondents pointed the finger at comprehensive risk modelling, while 27 per cent saw the greatest lack in the seniority of risk managers. Some 25 per cent stated the area most lacking was executive remuneration that did not encourage short-term risk taking, while 68 per cent 'somewhat agreed' that proposed guidelines on executive remuneration aimed at removing incentives for short-term risk would lead to more appropriate risk taking in financial services.
When it came to the representation of actuaries within corporations, nearly 27 per cent of respondents stated there was no actuary on either their board or in their executive team. The Institute of Actuaries called for more actuaries to be employed in risk management teams or to act as chief risk officers.
About 20 per cent of respondents stated that they had an actuary on their board, nearly 30 per cent had an actuary on their executive team and 24 per cent had an actuary on their board or in the executive team.
Recommended for you
The Compensation Scheme of Last Resort says it has received over 200 claims for compensation relating to personal financial advice since its inception and detailed the specific recurring issues being raised by claimants.
Two financial advisers have shared with Money Management why they opted to specialise in certain client niches when setting up their own business.
Insignia Financial has reached a major milestone in completing the separation of MLC Wealth from NAB, having acquired the firm back in 2021.
There could be changes ahead for how ASIC requires licensees to handle conflicts of interest as the corporate regulator announces it will be meeting key stakeholders next year to update guidance.
