Treasury Management Internation Logo

SunGard and PRMIA Research Reveals Risk Management Evolution From Regulatory Burden to Strategic Function

Published 

A global survey undertaken by the Professional Risk Managers’ International Association (PRMIA) and SunGard reveals an attitudinal shift among risk managers, who are now increasingly viewing risk management as a strategic core competency rather than just a regulatory obligation. The survey captured the views of more than 200 banking risk managers across the world about their collateral and exposure management priorities.

Key findings revealed:

  • Stress testing capabilities ranked as a lower than expected priority, behind collateral consolidation and asset and exposure valuation. This is particularly surprising in light of the impending European Central Bank comprehensive assessment, due to be published in November 2014, which will disclose those under the baseline and adverse scenarios of stress tests. This could suggest that while regulatory requirements remain important, banks are beginning to focus more on longer term risk management capabilities.
  • In addition to stress testing, the calculation of regulatory limits exposures also ranked as a lower than expected priority.
  • Over 96% of respondents confirmed that combined credit risk and collateral management capabilities were important, further highlighting how firms are increasingly taking a more longer term view of risk management rather than a short-term, tick box exercise.
  • Other priorities for risk managers included centralization of customer information to drive increased accuracy, improved monitoring of counterparty risk, enhanced reliability of risk data and better single borrower exposure and monitoring internal limits.

“These key findings highlight an important step change for the industry. While it is surprising that regulatory requirements such as stress testing rank as a lower than expected priority, this also suggests that the practice of risk management is evolving to become more strategic and operational. This is particularly evident when looking at today’s collateral and exposure management priorities. Taking a longer-term view towards risk will undoubtedly enable banks to successfully navigate the more complex regulatory landscape, but also lay the foundations for an effective risk strategy which drives competitiveness from compliance” — Sven Ludwig, regional director of PRMIA and senior vice president, risk management and analytics, SunGard

“Collateral is one of the key focal areas to mitigate systemic risk. Strategic investments here can improve all three levels of shareholder value: revenue enhancement, cost containment and capital efficiency. More specifically, banks that improve their collateral and exposure management capabilities can more effectively manage lower interest rate risk and therefore enjoy higher equity leverage.  We see a continued focus among banks on enhancing these capabilities, as they increasingly recognize their importance in helping to better manage risk in the long-term.” — Jochen Schneider, chief operating officer, SunGard’s retail banking business

Most recent episodes

Trends in RFPs and RFIs: What Treasurers Want

Eleanor Hill (TMI) invites Dick Oskam and Bert Van Drie (ING) into the TreasuryCast hotseat to find out what trends treasurers want to see emerge from the Request for Proposal (RFP) and Request for Information (RFI)...

33:16

Creating a Connected Financial Office

When data flows are connected, it’s so much easier to make quick and accurate decisions. This is the principle behind the notion of the connected financial office. In this podcast, Gareth Priest (Bottomline Technologies) provides informed advice on how...

18:34

Journeys to Treasury: Managing Changing Perspectives

For this special edition of TreasuryCast, we showcase the results of the Journeys to Treasury 2021-22 report. Here, Jan Dirk van Beusekom (BNP Paribas) and Christian Mnich (SAP) offer Eleanor Hill (TMI) an informed view...

33:03

Cybersecurity for Treasurers

Cybercrime and fraud is on the rise and new attack vectors are emerging with alarming frequency. In this podcast, Nicolas Trimbour (BNP Paribas) and Laurent Sarrat (Sis ID) provide an overview of the latest tools and best practices treasurers should be employing...

37:53

A New Treasury Ecosystem: Open Banking, APIs, and BaaS

For this special edition of TreasuryCast, Eleanor Hill invites Peter Claus-Landi (GE) and Jared Smith (HSBC) to cover how key API-centric developments are changing the treasury landscape. With APIs significantly...

18:02

Using Data as the Corner for Finance Transformation

Many organisations face challenges in managing spend, payments, and cash effectively due to siloed processes and datasets across multiple departments. In this podcast, Ulrika Haug (Coupa) and Kim Estes (The Knot...

29:20

Realising Treasury’s True Value – A Strategy for Change

Join John Meehan (Froneri) to hear how Froneri utilised a year of no acquisitions and no meetings to implement a total transformation project through implementation of a TMS, unlocking the true value of his corporate...

49:14

Lessons from Innospec on Building a Strong Cash Culture

Without ready access to the key metrics of cash forecasting, Andrew Hawes (Innospec) knew the business could do little more than react to events. But without the collaboration of key stakeholders too, he knew that...

35:08

How to Make Your TMS the Ultimate Investment Tool

The right TMS can be a huge asset to treasury. But these one-stop shops often fall short when it comes to short term investment workflows. In this podcast, Ed Lopez, James Griffin (Calastone), Jeannot Jonas (Carrier...

01:24:00