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AP banks to invest further on risk management

Jack Loo | Feb. 27, 2013
IDC Financial Insights report also says banks are open to outsourcing to risk management specialists

Sixty-two percent of Asia Pacific banks are expecting to increase their technology spending on the area of risk management, according to an IDC Financial Insights survey.

The report, Business Strategy: Asia/Pacific CRO Survey - Risk Management in the "New Normal" Environment, polled 40 banking chief risk officers (CROs) and their deputies from across 11 Asia Pacific nations.

According to the study, more than a third of risk professionals are projecting at least a seven percent increment in spending in 2013.

"Our findings reveal that while capital remains precious, IT and risk offices at financial institutions are cognizant of the need to establish a fine balance between driving business strategies and enhancing risk management controls," said Li-May Chew, associate research director, Asia/Pacific Financial Advisory Service, IDC Financial Insights.

IDC Financial Insights noted that the banks are prioritising their technology investments into three areas with the most important being credit analytics, followed by enterprise data management, and then enterprise risk dashboards and reporting.

"They are also investing in skilled risk management staff, which is becoming a rare commodity in Asia/Pacific these days, since all the tools are irrelevant without the right people to utilise and manage them," said Chew.

The survey further points to a surprisingly high 77.2 percent of respondents agreeing that risk management vendors could possibly (though not necessarily) provide a greater level of risk analytic ability than could be found internally and, as such, are increasingly open to outsourcing to risk management specialists.

Nonetheless, regional banks are not transitioning towards the utilisation of cloud-based risk solutions yet. While this trend is increasingly prevalent in other regions, only 30.8 percent of the surveyed are sufficiently comfortable to even consider this possibility at the present moment, citing data privacy and security regulations as core inhibitors.

"Risk executives will further engage in new dialogues with the chief investment officers to ensure that risk is integrated with all business technology decisions, seek out new tools for risk management to cope with the 'new normal' environment, and invest in programmes to ensure that risk management skills, code of ethics, and compliance obligations are developed and understood across all strata of the institution," said Chew.


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