Financial institutions face "toughest economic environment".

THIRTEEN Chief Risk Officers (CROs) and their deputies from the region's top financial institutions attended the recent Singapore Risk Roundtable, organised by IDC Financial Insights Asia/Pacific. Business, operational and technology issues that preoccupy the attention of risk executives at financial institutions in Singapore were spotlighted during the discussions.

Li-May Chew, senior research manager, Financial Services Advisory for IDC Financial Insights Asia/Pacific says: "Financial institutions are facing the toughest economic environment in living history, with risk raised multiple times and a general rise in risk aversion."

She adds: "Fraud has been rising in tandem with the economic malaise and the increasingly prevalent use of technology. Delegates stressed that external fraud detection and prevention boils down to the need for customers to take personal responsibility for their information and closely guard their data privacy rights. Conversations around internal fraud meanwhile saw the need for institutions to practice sensibility and ensure a balance between enforcing security at the expense of convenience and technology availability."

On the need to foster a culture of risk awareness, participants have witnessed progress from 2008, when CROs were grappling with securing management buy-in to risk projects. Now, regular conversations are being held between risk specialists, lines-of-businesses, and senior management to ensure that the full range of risk issues is actively managed by the organisations.

The roundtable also sought feedback from participants about their growth strategy and technology initiatives for the short term. Despite claims of significant decreases in spending across the board in Asian financial institutions, only 8 per cent of the delegates stated their intent to trim risk management spending, with 17 per cent conversely expecting increases in budgets. This may create opportunities for new competitive dynamics. Instead of being paralysed by current uncertainties, progressive institutions are using this downturn as an opportunity to take calculated risks related to their strategy and business execution (for example, strategic acquisitions, and investments in new technologies) to capitalise on market opportunities, leapfrog hesitant competitors, and put themselves in a good position for the upturn.--CT

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