Propelling risk management forward in turbulent times

Risk executives expect increasing severity, but are ready to guide the function toward a strategic, integrated partnership.

Turbulent times are ahead for risk management executives in capital markets, who anticipate increasing severity around most forms of risk. Accenture’s 2015 Global Risk Management Study highlights the challenges risk executives expect to face in coming years, and shows how some risk leaders are finding ways to better position their function—even in challenging times.

This year’s study gathered insights and commentary from 170 capital markets executives, from around the globe, in the areas of wealth management, asset management and investment banking. The findings include in-depth interviews conducted with senior banking executives.

More than half of these respondents see increasing severity for several risks, including:

  • Market risks such as equity and commodity risks (62 percent expect an increase)

  • Business risks including changing margins and market demand (61 percent)

  • Cyber and IT risk (58 percent)

  • Market disruption from new technologies (56 percent)

  • Operational risks related to people, projects, systems and the like (56 percent)

  • Liquidity risk (56 percent)

Today’s capital markets environment poses three key challenges for risk executives: markets that remain volatile, customers who demand more and better service than ever, and digital disruption resulting from rapid technology advances. Increasing severity of risk is inherent in all three challenges.

Making matters worse, many risk executives in capital markets report lacking the talent and resources they need to thrive in this rapidly changing environment. Only 9 percent of the executives surveyed say their risk function has the resources it needs in specialized areas, such as data modelling and emerging risk. 

These talent gaps are being addressed—but slowly. In two years, only 27 percent of respondents believe their risk function will possess the right specialized talent.

Despite the turbulence, there’s good news for capital markets risk executives. A solid majority of respondents—85 percent—say the risk function is an important, if not critical, enabler of long-term, profitable business growth. They believe the function is stabilizing, maturing and gaining in strategic importance.

How can the function navigate increasing severity and digital disruption to become a strategic business partner?

Accenture’s study points to several steps risk managers can take. Risk executives can:

  • Work to strengthen integration between the risk function and the finance function

  • Push operational risk management to the top of the agenda

  • Recruit and retain a broad set of talent equipped to tackle a variety of challenges

  • Work to embed a strong, consistent risk culture throughout the organization

  • Address shortcomings in data capture, management and analysis

  • Use analytics tools and technologies to build predictive capabilities

  • Develop strategies for new challenges such as cyber risk and social media risk

These actions can guide the risk function forward, past current challenges and volatility toward a strategic role that partners proactively with the business.