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Managing risk in perilous times: Practical steps to accelerate recovery
A new Economist Intelligence Unit report entitled "Managing risk in perilous times: Practical steps to accelerate recovery", issued in May 2009 and sponsored by KPMG International, ACE, SAP and Towers Perrin, explores current thinking around risk management, and proposes ten practical steps that financial institutions could take to strengthen their governance and management of risk.
The report is based on a program of in-depth interviews with leading participants from the financial services industry, as well as independent risk experts.
The report identifies the following ten steps to address current weaknesses in risk management:
1. Risk management must be given greater authority.
2. Senior executives must lead risk management from the top.
3. Institutions need to review their levels of risk expertise, particularly at the highest levels.
4. Institutions should review data in risk models, and combine this output with human judgment.
5. Stress testing and scenario planning can enable more appropriate responses to events.
6. Incentive systems must be constructed to reward long-term stability, not short-term profit.
7. Risk factors should be consolidated across all the institution’s operations.
8. Institutions should ensure that they do not rely too heavily on data from external providers.
9. A careful balance must be struck between the centralization and decentralization of risk.
10. Risk management systems should be adaptive rather than static.
For more details, please download the full Adobe PDF version of the document from the KPMG global site from the link below.
Managing risk in perilous times: Practical steps to accelerate recovery
The report identifies the following ten steps to address current weaknesses in risk management:
1. Risk management must be given greater authority.
2. Senior executives must lead risk management from the top.
3. Institutions need to review their levels of risk expertise, particularly at the highest levels.
4. Institutions should review data in risk models, and combine this output with human judgment.
5. Stress testing and scenario planning can enable more appropriate responses to events.
6. Incentive systems must be constructed to reward long-term stability, not short-term profit.
7. Risk factors should be consolidated across all the institution’s operations.
8. Institutions should ensure that they do not rely too heavily on data from external providers.
9. A careful balance must be struck between the centralization and decentralization of risk.
10. Risk management systems should be adaptive rather than static.
For more details, please download the full Adobe PDF version of the document from the KPMG global site from the link below.
Managing risk in perilous times: Practical steps to accelerate recovery
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