Canadian execs focused on risk culture: Ernst & Young

Three-quarters of Canadian executives are taking measures to reduce their liquidity risk since the 2008 economic crisis, finds an Ernst & Young study.

Against a backdrop of global issues, banks and insurance companies are reshaping their risk management processes, monitoring compliance and testing risk appetite.

Of the 69 global banks and six insurance companies surveyed, 77% are either in the process of or have finished in-depth reviews to identify and assess their business risks. According to respondents, revolving regulatory regimes such as Basel III and the Dodd-Frank Act will fundamentally change their company’s business model.

Additional findings show:

• 75% have created and implemented new stress testing in the past 12 months;

• 58% have increased their attention to risk culture in the past 12 months, versus 23% in 2011;

• 87% now have separate risk and audit committees, while shifting roles and responsibilities so that 58% of chief risk officers report directly to the CEO and 90% have direct access to the board or risk committee;

• 73% reported inadequate systems and data to capture and report and measure information is a key issue;

• 63% cite it’s difficult to align the sales-driven business mindset with a risk-focused culture.

“Adapting a risk-focused culture by training and motivating employees to look beyond adherence to limits and consider the overarching risk complications is the most important step,” says Paul Battista, Canadian financial services advisory leader at Ernst & Young.

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