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Sai Sireesh: Key Findings - Future State of Risk 2010 Survey

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In my previous blog, I broadly covered the release of the “Future State of Risk 2010” survey which was commissioned jointly by PRMIA.org and Microsoft. In addition, I briefly covered the summary in a webinar last week to over 120 professionals. The webinar was well received and followed by multiple requests for a survey copy.

Today, I will provide more details on the survey findings. This survey polled respondents across financial industry, as well as the broader sector to have a more balanced view of the results. Out of a total of 1,662 global respondents, 1,398 (84%) were from financial institutions and 264 (16%) from non-financial institutions. Here are some key results:

  • The top five financial risk management future trends are: 1. Liquidity Risk Buffers, 2. Enterprise Risk Management, 3. Stress Testing, 4. Managing Systemic Risk, and 5. Banking Book Credit Risk Models.
  • The top five non-financial risk management future trends were: 1. Enterprise Risk Management, 2. Operational Risk, 3. Cash Flow at Risk (CFAR), 4. Productivity & Efficiency in Risk, and 5. Technology Risk.
  • Risk Management/Compliance trends foreseen in the next two to three years include: 1. More visualization of analysis, 2. Collaboration as a key pillar, and 3. Broader and wider access to business insights and analytics, i.e. risk management for everybody.
  • Risk management and compliance functions will rely much more on: 1. Automating work flows and processes, 2. Self serve – providing powerful analytics to end users, and 3. Unlocking business data/insights.
  • Top skills which risk managers of the future need to focus on include: Deeper business knowledge was ranked the top skill; Quantitative skills (math, statistics) and Communication skills ranked second and third respectively.
  • Risk managers today spend on average 62% of their time on tactical tasks (e.g. data collection),and only 36% on strategic/analytical activities. The percentage of firms taking a more strategic and longer term view of risk management practices will rise.
  • The percentage of operational costs needed for an effective risk management program: 27% felt 2-5% of the operational costs was adequate; 25% voted for 5-7% of the operational costs and 24% voted for a much larger share of 7-10% of the operational costs.
  • Future decisions on risk management technology investments will be based on: 1. Efficiency - Integrated offerings which help bring efficiency to work flows and processes, 2. Self-service – The right information, at the right time in the right format for end users, and 3. Productivity – Saving valuable hours for employees in everyday risk management tasks. Interestingly, cost came out as the lowest factor.

Do you agree /disagree with your peers in the risk industry? I welcome your thoughts.