Report

Financial services CEOs say management should spend more time on risk and compliance

Nearly a third (31 per cent) of financial services industry chief executives believe that senior management should be spending more time on risk and compliance, according to a study by Kinetic Partners.

Nearly half of financial services CEOs (48 per cent) believe that senior managers should be spending between 20 per cent to 40 per cent of their time on risk management and compliance, but 31 per cent of this group admit that this standard is not being achieved.
 
This number climbs even higher for chief risk officers (CROs), 43 per cent of whom believe that senior management is not spending enough time in this area. Kinetic Partners’ Global Regulatory Outlook research study reflects the views of senior executives within the banking, asset management and hedge fund industries, and includes contributions from Howard Davies and Howard Flight.
 
Andrew Shrimpton, regulatory compliance member at Kinetic Partners and one of the authors of the study, says: “Strong business performance is clearly important for CEOs and the board, but senior management needs to have a sound understanding of risk and compliance in order to be truly effective. In particular, effective non-executive directors need to understand the key regulatory issues and questions they should be raising with their CEOs. The business leaders that participated in our Global Regulatory Outlook study say that they welcome regulation in this area, understand the need for it, and want to work with lawmakers to improve transparency and restore consumer confidence. However, many of these executives still have strong reservations around the challenges involved in building next-generation regulation into effective business processes.”
 
Additional findings from the Global Regulatory Outlook research study also highlight the vital role that risk management and compliance play within the business:

• More than three-quarters (77 per cent) of the business leaders questioned felt that investment in their internal compliance arrangements would help to strengthen their reputation

• More than two-thirds (65 per cent) of these same respondents felt that investment in internal compliance arrangements would increase the company’s competitive performance over the long-term.
 
Shrimpton says: “These findings not only highlight the need for a tighter focus on risk management at board level, but also suggest that improvements in this area will offer benefits that go far beyond compliance alone. The fact that so many CEOs believe that senior management is failing to spend enough time in this area should act as a wake-up call for any firm that wants to achieve greater transparency, restore consumer confidence and improve its competitive performance overall.”

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