Business / View

Absence of growth is biggest peril for lenders

By Steve Culp and Xiao Shaolin (China Daily) Updated: 2015-06-23 09:36

Risk managers play larger role in helping the industry reignite profitable expansion

For banks facing continuing market volatility and concerns regarding nonperforming loans, risk management plays a double role. Defensive risk management-focused on regulatory compliance, controls and, basically, on staying out of trouble-remains vitally important. But more and more often, risk management is playing an active role in helping banks identify and achieve growth.

Accenture's 2015 Global Risk Management Study, based on interviews with 470 top-level risk decision-makers at banks, insurers and capital markets firms, found that banking respondents reported broad-based efforts to prepare the risk management function to play both roles.

Of those surveyed, 150 of the executives were based in the Asia-Pacific region. While almost eight in 10 respondents said they believe the risk function is a critical or important enabler of long-term profitable growth, there is more work to be done.

Seventy-two percent of banking respondents said that gaining the trust of the business remains an obstacle to their effectiveness.

While all of the big five Chinese State-owned banks (Industrial and Commercial Bank of China, Bank of China, Agricultural Bank of China, China Construction Bank and Bank of Communications) reported slower profit growth of less than 2 percent in the first quarter of this year, the big question for China's banks is how to make their business and operating models agile, flexible and suited for long-term profitable growth.

The banks cannot achieve these objectives without the right risk management structure, people and processes in place. Respondents to the study indicated they are taking a number of actions to get risk management in shape for this challenge.

In particular, they say they are:

・ Working to identify new requirements for risk management and where they fall short

・ Building closer working relationships between risk management and the rest of the business

・ Investing in talent, particularly in digital disciplines such as analytics

・ Enhancing the effectiveness of operational risk management

・ Developing a consistent, enterprise-wide risk culture

On both the defensive and the offensive sides of the risk management equation, banks also told Accenture that they are accelerating the adoption of analytics tools that make it easier to identify and mitigate risk in an increasingly complex market.

Previous Page 1 2 Next Page

Hot Topics

Editor's Picks