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Despite the financial meltdown, risk managers are still not getting the resources and access to boards enjoyed by revenue makers, according to StrategyLab, a private research unit funded by SimCorp. The global research found that cost pressures within financial institutions prevented further resourcing for risk managers, and that boards were far removed from the concerns of their risk management teams. Developed by StrategyLab, the survey of 90 financial industry professionals around the world was executed by AC Nielsen.

Peter Hill, managing director of SimCorp Asia, said the risk management operations of many financial institutions were viewed as departments, and had no representation at board level. “Their perception is that they’re under-resourced – in staff, training and access to new risk models,” Hill said. While the quantitative aspects of risk management, such as financial risk modelling and operational risk management, were generally covered well, other areas, such as knowledge and strategy risks, and data integrity, received insufficient attention.

Risk managers were generally satisfied with their models and software, but those whose systems could not provide real-time data feeds found the current environment difficult, since historical models showed few parallels with the recent volatility, Hill said. “They had no new IT systems, and wanted to ensure that their systems were providing them with accurate data…The volatility has shown that the historical data is irrelevant.” He said that staff training and resourcing were also areas of concern.

StrategyLab was set up to conduct academic research into the use of information technology in investment management, and is separate to SimCorp’s research and development program. Its director is Professor Ingo Walter from the Stern School of business in New York University, and it is linked with INSEAD and the University of Copenhagen. A search is underway for an academic partner in Asia.

 

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