Aug 15, 2012
Study reveals need for risk management focus in China
A new survey has found that Chinese
financial institutions are too focused on addressing competition and dealing
with the complex financial environment at the expense of risk management.
The report, by consultancy Celent
and sponsored by trading technology company SunGard, was based on interviews
with risk managers from large Chinese banks, securities firms and asset
management companies.
Of those financial institutions
questioned, only 11% believed that their existing systems could meet their risk
management needs.
All the risk managers interviewed saw
the need to improve the functionality of their existing IT infrastructure, as
well as their risk systems. They also felt strong need to improve
business processes and for China to adopt a new risk management framework such
as Basel III or Solvency II. Operational risk and market risk were revealed to
be major areas of future investment for financial institutions.
The survey additionally revealed
that financial institutions' investment in risk management was determined by
challenges in their respective business units. The risk management capabilities
among asset management firms were highly varied and would need integrated,
multi-asset portfolio and risk management technologies to cope with investor
sophistication and a broad range of financial products.
Neil Katkov, Celent’s senior vice
president, Asia, said, "The survey found that, in order to compete
effectively on the global stage -- and against both foreign and domestic
competitors in China -- financial institutions need to enhance their risk
management capabilities by improving their enterprise-wide analysis of risk
management data, improve their technology, build on new frameworks such as
Basel III and improve their business processes.”
Reporting by Jaya Menon