SUN­GARD-SPON­SORED CE­LENT SUR­VEY FINDS LARGE CHI­NESE FI­NAN­CIAL IN­STI­TU­TIONS NEED TO IM­PROVE RISK MAN­AGE­MENT

Source: Sun­guard Press Re­lease, 14 Au­gust 2012

Insurance - - INDUSTRY UPDATES -

Ac­cord­ing to Ce­lent’s sur­vey spon­sored by Sun­Gard, com­pe­ti­tion from within the in­dus­try and a more com­plex fi­nan­cial en­vi­ron­ment now out­weigh reg­u­la­tory fac­tors as key con­sid­er­a­tions for risk man­age­ment at large fi­nan­cial in­sti­tu­tions in China.

In-depth in­ter­view find­ings with risk man­agers from large Chi­nese banks, se­cu­ri­ties firms and as­set man­age­ment com­pa­nies re­vealed that only 11% of large fi­nan­cial in­sti­tu­tions be­lieved their ex­ist­ing sys­tems could meet their risk man­age­ment needs.

The key find­ings of the sur­vey in­clude:

100% of risk man­agers in­ter­viewed recog­nise the need to im­prove func­tion­al­ity of their ex­ist­ing risk man­age­ment IT sys­tems.

The need to im­prove risk sys­tems was fol­lowed by the need to im­prove busi­ness pro­cesses and adopt­ing a new risk man­age­ment frame­work such as Basel III or Sol­vency II.

Op­er­a­tional risk and mar­ket risk were re­vealed to be ma­jor ar­eas of in­vest­ment for fi­nan­cial in­sti­tu­tions. 38% of firms sur­veyed were fo­cused on en­hanc­ing op­er­a­tional risk, while 30% placed pri­or­ity of strength­en­ing their man­age­ment of mar­ket risk.

The sur­vey also re­vealed that fi­nan­cial in­sti­tu­tions' in­vest­ment in risk man­age­ment was de­ter­mined by chal­lenges in their re­spec­tive ver­ti­cals:

Banks are well cap­i­talised but dereg­u­la­tion and in­creased ex­po­sure to global mar­ket forces will drive risk man­age­ment up­grades.

Risk man­age­ment ca­pa­bil­i­ties amongst 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.

Re­cent reg­u­la­tions have broad­ened the scope of busi­ness for se­cu­ri­ties firms, who now have to en­hance their risk man­age­ment ca­pa­bil­i­ties in or­der to keep tabs on in­creas­ing overseas busi­ness and more com­plex prod­ucts.

Neil Katkov, se­nior vice pres­i­dent, Asia, for Ce­lent said that 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.

Ac­cord­ing to Richard Zhu, chief op­er­at­ing of­fi­cer of Sun­Gard China, China's eco­nomic growth has slowed and growth in Europe re­mains weak. In ad­di­tion, Chi­nese risk man­agers are nav­i­gat­ing domestic dereg­u­la­tion, in­creased trade vol­umes and trade com­plex­ity and ex­pand­ing busi­ness de­mands. They need to en­sure that the risk po­si­tion is ac­cu­rately mea­sured, com­mu­ni­cated and un­der­stood through­out the or­gan­i­sa­tion.

Richard Zhu, Chief Op­er­at­ing Of­fi­cer, Sun­Gard China

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