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
Ethical super fund Australian Ethical has announced the appointment of Anthony Lane as chief operating officer.
The structural shift towards active ETFs will reshape the asset management industry, according to McKinsey, and financial advisers will be a key group for managers to focus their distribution.
ASIC has warned that practices across the $200 billion private credit market are inconsistent and, in some cases, require serious improvement.
A surge in electricity prices has driven the monthly Consumer Price Index to its highest level in a year, exceeding forecasts.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
225.31 3 y p.a(%)
2
Loftus Peak Global Disruption Fund Hedged
120.73 3 y p.a(%)
3
Global X 21Shares Bitcoin ETF
72.47 3 y p.a(%)
4
Paradice Australian Mid Cap A
69.09 3 y p.a(%)
5
Global X Ultra Long Nasdaq 100 Complex ETF
61.94 3 y p.a(%)
