POWERED BY MOMENTUM MEDIA
Reputational risk in focus following post-GFC scandals
Financial services scandals following the global financial crisis (GFC) has led investment institutions to rank reputational risk alongside market risk, a study by The Economist Intelligence Unit and State Street Global Investors has found.
The global survey involved almost 300 employees of investment institutions and found that reputational risk and market risk were the top priorities (56 per cent) in 2013, ahead of investment risk (46 per cent), regulatory risk (34 per cent) and counter-party risk (24 per cent).
However, lines were drawn down geographical and employment-role lines.
In Asia-Pacific, the emphasis was on market risk, possibly due to the region's historically volatile equity market.
Asset owners were more preoccupied by market and investment risks than asset managers, who had a focus on reputational risk.
The study found that the priorities of risk managers and other executives were not always aligned. Risk managers saw counter-party risk as their third most significant risk, but this category fell to sixth place among other respondents.
The Economist Intelligence Unit said this reflected a greater emphasis on risk post the global financial crisis. Risk awareness has increased from 2007, when only 30 per cent of organisations rated risk as their highest priority compared to 78 per cent now.
However the role of risk managers was not well understood. It was found that often the perception of a risk unit's function differed among various levels of an organisation.
The study found risks were not always properly explained. With the advent of embedded risk management processes around the world, investment institutions had an opportunity to strengthen their communication around risk, the report said.
AUTHOR
Staff Writer
Money Management staff writers are writers who contribute to the website from time to time. If you would like to discuss the content contained within this article please contact us.
Recommended for you
Taking a purely passive investment approach is leaving many investors at risk of heightened valuation risks, Allan Gray and Orbis Investments have cautioned.
Annual trimmed mean inflation saw a slight spike in April, according to data from the ABS.
Active managers say that today’s market volatility and dislocation are creating a fertile ground for selective stock picking, reinforcing their case against so-called “closet indexers”.
Platform leaders admit they’re operating under constant pressure and a persistent “state of paranoia” to keep pace with technology that is reshaping how clients access and interact with their wealth.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
92.15 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
53.24 3 y p.a(%)
3
Global X GlobalX FANG+ ETF
43.15 3 y p.a(%)
4
DomaCom Shoreline North Coogee
36.26 3 y p.a(%)
5
GAM LSA Private Shares AU I
35.87 3 y p.a(%)
