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Three Quarters of Risk Experts Believe Financial Institutions Continue to Lack Sufficiently Robust Processes to Prevent a Future Crisis

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Robert Akam or Joe Eldridge 020 7400 4480 or email rakam@hanovercomms.com or jeldridge@hanovercomms.com
Leading financial business and academic thinkers polled ahead of the Fourth Annual Cass-Capco Conference on Risk

A survey of those invited to the fourth annual conference of the Cass-Capco Institute on Risk has found that 73% of global industry and academic experts believe that financial institutions have not instituted adequate risk processes to prevent a future crisis. Invitees were asked for their thoughts in advance of the Cass-Capco conference which takes place today in London.

Over half say regulatory reforms will not prevent another crisis

The survey found that just over half of respondents (51%) still do not believe that current regulation will be better able to prevent another crisis than those that were in place in 2007. This figure rises to 57% when considering only those working directly in the industry. The consensus is that a proactive and prescriptive approach from regulators will actually help risk management, with 68% of respondents holding this view. Only 21% believe more active regulation will hinder risk management.

Integrated, accurate data the greatest challenge for managing risk

The survey results clearly highlight that having better quality information is the greatest challenge financial institutions face in managing risk. 27% of all those questioned and 34% of industry practitioners said that “harmonising data, analytics and reporting across the business” was the single biggest challenge of regulatory implementation.

Banks expected to pass costs on to clients

When asked whether they thought financial institutions would pass on increased costs related to the regulatory changes (due to the consequent higher capital and funding overheads) to clients, three-quarters of respondents said that they expect financial institutions to do so.

Mark Connolley, Capco UK Finance, Risk and Compliance Lead & Partner: “The recent crisis showed just how important high quality risk management is. Yet we clearly have a way to go to achieve a robust framework for regulation that does not stifle growth. There is a sense of agreement among industry practitioners and academics that implementing effective risk management processes remains a challenge for a number of financial institutions. Nevertheless the survey shows that experts agree that regulation has a place in assisting the creation of a better risk framework. To position themselves for future success, institutions still need to conduct wholesale change in how they handle risk.”

Professor Steven Haberman, Deputy Dean of Cass Business School: “These insights show that despite the lessons of the financial crisis, the sentiment among risk practitioners and academics remains that the regulatory reforms alone will not do enough to reduce risk in the system. The Cass-Capco annual conference is an important opportunity for experts working in risk management to come together to debate and refine thinking on risk management in the financial services industry. These discussions are vital to ensuring that we have a safer financial system globally.”

Notes to Editors

1. For full details of the conference programme, click here. The conference speakers include:

• Thomas C. Wilson, Chief Risk Officer, Allianz SE, and
• Tobias Guldimann, Chief Risk Officer, Member of the Executive Board, Credit Suisse Group AG

2. The survey of conference attendees included a mix of both industry experts working in risk management as well as academics specialising in risk in the financial services sector. A total of 132 people were surveyed from 22-31 March 2011.

3. The Capco Institute publishes the Journal of Financial Transformation, the only professionally focused scientific journal in finance to be accredited by the American Economic Association and is among the 20 journals recommended by the European Finance Association. The Journal, celebrating its 10th anniversary this year, has received the APEX Award for Publication Excellence every year since 2002 and has had contributions from 20 Nobel Laureates. The Capco Institute is ranked among the world’s foremost research institutes by the Social Science Research Network.

4. About Capco
Capco, a global business and technology consultancy dedicated solely to the financial services industry. Our professionals combine innovative thinking with our unrivalled first-hand industry knowledge to offer our clients consulting expertise, complex technology and package integration, and managed services to move their organisations forward.

Through our collaborative and efficient approach, we help our clients successfully increase revenue, manage risk and regulatory change, reduce costs and enhance control. We specialise in banking; capital markets; wealth and investment management; finance, risk & compliance; and technology. We serve our clients from offices in leading financial centres across North America and Europe. To learn more, visit our web site at capco.com and subscribe to Capco's newsroom RSS feed.

5. About Cass Business School, London
Cass Business School, which is part of City University London, delivers innovative, relevant and forward-looking education, training, consultancy and research. Located in the heart of one of the world’s leading financial centres, Cass is the business school for the City of London. Cass has the largest faculties of Finance and Actuarial Science and Insurance in Europe. It is ranked in the top 10 UK business schools for business, management and finance research and 90% of the research output is internationally significant. Cass is a place where students, academics, industry experts, business leaders and policy makers can enrich each other's thinking. For further information, visit www.cass.city.ac.uk.

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