Operational risk - Investment Managers

Article

Operational risk

An emerging focus for investment managers

Investment managers may begin to shift their risk management focus back toward operational risk, as well as several other emerging areas, according to results from DTTL's Global Risk Management Survey, Eighth Edition, which gauged the state of risk management in the financial services industry, including investment management firms.

Executive Summary

Cary Stier, Partner, Global Investment Management Leader, Deloitte Touche Tohmatsu Limited

"Most firms described themselves as effective in managing liquidity risk (85%), credit risk (83%) and regulatory and compliance risk (74%), according to survey results. However, only 45% gave themselves a high rating for operational risk management—a little less than the 47% recorded in the previous survey conducted in 2010. Eighty-six financial institutions from around the world participated in the survey, representing a range of financial services sectors and with aggregate assets of more than US$18 trillion. One-half of the 86 respondents identified themselves as either stand-alone investment managers or investment managers of larger integrated financial institutions (primarily banks and insurance firms)."

Mary Galligan, Director, Cyber Risk Services, Deloitte US

"With 40% of breaches resulting from hackers gaining access through third-party systems, it is increasingly important that investment managers understand their extended enterprise and the control frameworks that service providers have to secure client and transaction data as well as intellectual property. Some investment managers are conducting cyber threat assessments to better understand their potential exposure."

Garrett O'Brien, Partner, Capital Markets, Deloitte US

"Doing more with less is placing a premium on resources with the right skills to manage day-to-day risk while accommodating growing and emerging risk areas. ‘For investment management firms,’ says Garrett O’Brien, ‘a key question emerging around managing risk in general is: What is the most efficient and effective way to focus their time and effort on risk, particularly if resources are constrained?’ Increasingly, there is a shift toward allocating resources to key focus areas as a result of strategic risk assessments. The use of formal risk assessments allows organisations to compare and contrast risk exposures across areas that were traditionally managed in silos."

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Inside magazine issue 7, February 2015

Inside is Deloitte’s quarterly magazine offering an exclusive insight into best practices, trends and opportunities faced by our clients across all industries.

Inside focuses on the main hot topics relevant for the market (Asset management, Banking, Insurance, Public sector, Healthcare, Private equity, Real estate, TMT, Manufacturing and consumer business, Transport and logistics).

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