Cary, N.C. - Reaping business benefits now matches regulatory compliance as the key driver of enterprise risk management (ERM) systems according to a global survey of 339 financial services executives. These benefits include improved performance management, better risk-based pricing, and reduced capital allocation and credit loss. These are the results of research conducted by SAS, a business intelligence provider.A full 83% of participating financial institutions view ERM as a strategic priority, per the survey. Many are setting up new ERM or "integrated compliance" programs. The survey also found that credit risk management is still the top risk management expenditure priority for most firms. In addition, 78% of respondents view credit risk management as critical and anticipate significant, quantifiable economic rewards over the next 24 months, including a 10% reduction in economic capital and a 14% reduction in cost-of-credit losses.
Data quality and data management continue to be the biggest obstacles to the successful implementation of an ERM system, according to respondents. Even though discussions about risk management have evolved and matured over the past two years, these data obstacles continue to plague risk management implementations.
"These findings reiterate the significant role of data management and the need for organizations to focus on overcoming the data implementation issue," says Peyman Mestchian, SAS' director of risk management in EMEA. "To deliver an enterprise view of risk that meets all stakeholders' requirements, institutions have to start with what they have in common: information. That means lifting data out of the organizational and technological silos, cleaning it up, and integrating it into financial and customer decisions to enhance business value and manage companywide risk."
The survey responses indicate that, for long-term strategic benefits, firms need to rely on software that delivers consistent and transparent data governance. Focusing on regulatory timetables may obstruct progress toward more forward-looking ERM. This survey demonstrates that during the next few years, financial institutions will be looking to get value from their investment in compliance processes and systems. Firms are aiming to have a more integrated and systematic approach to ERM leading to risk-based performance management.
"The business case for ERM withstands the 'cost-benefit' test only if an organization can implement a fully integrated risk intelligence platform, drawing from existing data sources and working with complex and heterogeneous IT environments," explains Mestchian. "The platform needs to cover the full spectrum of risks, bringing them together under a single governance umbrella."
For a summary of the survey results, please visit http://www.sas.com/ermsurvey.
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