A report conducted by the Economist Intelligence Unit and sponsored by Protiviti found increased regulatory pressure to be the greatest risk management priority for executives in the financial services industry, despite the global demand for a reduction in regulation.
Sixty-two per cent of Australian survey respondents in the Restoring Confidence: Risk management capabilities report stated increased scrutiny designed to reduce the probability of failure is most challenging. This was 20 per cent above their overseas colleagues.
Australian financial services firms, however, rated higher than their international counterparts in business operations, risk management controls and independent assurance.
Eighty per cent of Australian firms rated themselves above their peers in terms of risk, compared to the 56 per cent figure from their overseas counterparts.
When it came to risk management controls, 62 per cent of Australian firms rated themselves above peers, while the global average was 51 per cent.
There was also a distinct difference in regards to independent assurance, with the Australian rating at 62 per cent and the global average at just 28 per cent.
Protiviti managing director Mike Purvis said despite the report indicating financial institutions around the world having progressed in improving risk management capabilities, it also shows they are still struggling with the basics five years after the financial crisis.
“It’s reassuring to know the Australian financial services sector is better prepared than most,” said Mr Purvis.
Mr Purvis said it was important for every jurisdiction to have sufficient regulation to ensure the future of its financial services sector.
“As always, the challenge is drawing that fine line in the sand between sufficient regulation and over regulation and in large part, Australia has got it right,” said Mr Purvis.
