Navigant Consulting (NYSE: NCI), a global consulting firm providing dispute, investigative, operational, risk management and financial advisory solutions, today announced the results of a new survey conducted by the Economist Intelligence Unit (EIU).
Nearly 200 financial services professionals were surveyed to evaluate the evolving role of risk management in financial services organizations. The survey indicates that financial institutions around the world are focused on the impact of risk on enterprise business value and profitability, rather than merely complying with arbitrary levels of risk exposure and performance.
The Risk Management Paradox, available immediately at navigantconsulting.com, is a summary of the first of three EIU surveys sponsored by Navigant. The survey results suggest there is significant room to improve risk intelligence - making it more current, comprehensive and consistent - an observation that is especially important as more than 70 percent of respondents cite risk disclosure as a likely element of expected regulatory reform.
"It is evident that the financial crisis has led to a 'crisis of confidence'," said John Schneider, Managing Director and head of Navigant's Capital Markets Regulatory Advisory team. "We're seeing a call to action by regulators across the globe to create additional transparency and risk monitoring capabilities to reduce the likelihood of another similar financial crisis."
According to the survey, most respondents stand by their risk-monitoring capabilities, but concede they are most confident about their ability to monitor mainstream risks (e.g., credit, accounting, liquidity risk), and least confident in the areas revealed as problematic by the recent credit crisis. For example, 87 percent say they are "Excellently" or "Well Positioned" to identify and monitor credit risk, but fewer (67 percent) are equally confident of their capabilities on enterprise risk, and 47 percent describe themselves as "Weak" on new and emerging risks.
"Effective risk management hinges not only on an organization's ability to capture data on risk, but the ability to interpret, escalate, and make decisions based on the information. The survey data shows that financial professionals recognize this need but struggle with implementing meaningful solutions to enhance risk management. We work alongside clients to design, enhance, and implement robust risk and compliance programs to shore up investor confidence," said Sharon Siegel Voelzke, Navigant's Vice President of Business Consulting Services.
Navigant's Capital Markets Regulatory Advisory team is prepared to help clients address the complex risks survey respondents found most problematic. The team has advised more than 100 asset management firms in matters such as compliance program development and ongoing compliance reviews; business unit, business process and controls risk assessments; pricing and valuations; restructuring; and regulatory exam preparation and response. In addition, Navigant provides investor due diligence services under a time tested and proven evaluation and risk assessment framework. They have performed approximately 150 sub advisor reviews in six regulatory schemes over the past four years.
The survey respondents comprise nearly 200 executives from a broad range of financial services firms around the globe. Of the executives surveyed, 37 percent are based in North America, and 33 percent in Europe; 30 percent are from firms with global assets of more than $250 billion, and 41 percent are senior corporate executives (including chief executive, financial and risk officers, as well as board members).