One third of US risk management professionals surveyed by industry association PRMIA have seen their IT budgets increased and plan to install new software to support the forthcoming Basel II capital requirements.
In a survey leading up to the June PRMIA Americas Summit, over 2000 US members were asked for their thoughts on various standards in the risk management profession.
The results suggest a pre-occupation with Basel II, with just under half the sample feeling that the current regulatory environment is beneficial to the profession. One in five believe that the risk management department is now being used for a competitive advantage, against a quarter who feel that they are operating a defensive strategy.
Thirty nine per cent of the sample believe that Basel II will stimulate advances in credit risk modeling, while 38% say that the rule change has forced them to examine or re-examine their operational risk strategies. One third say they plan to install new software and 32% say their budgets have increased because of Basel II.
Two-thirds of members' firms are using some form of risk-adjusted performance measures in evaluating performance. Most are using a VaR-based or RAROC-type formula.
Respondents report that in 69% of the cases, budgets and sophistication levels for dealing with credit risk are higher than two years ago, and over 25% report that they are substantially higher. Only one per cent report budgets and sophistication levels substantially lower than two years ago.