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May 12, 2010
Support for Systemic Data Collection Revealed in Survey of Financial Risk Experts
The results of a recent survey of financial risk management experts by PRMIA and the CE-NIF (Committee to Establish the National Institute of Finance) established that there is a strong consensus that not enough has been done to collect and analyze system-wide financial data. The risk experts who participated in the survey also broadly agree that future efforts to standardize and aggregate this type of system-wide data would significantly improve systemic risk management. The creation of an Office of Financial Research, which will be tasked with aggregating and analyzing system-wide financial data is one of the provisions in the regulatory reform legislation currently being debated in the U.S. Senate.
"Senior risk managers have been voicing their concerns about untreated financial systemic risk for many months," said Steve Lindo, Executive Director of PRMIA. "It was one of the top risk management concerns identified at PRMIA's Chief Risk Officer (CRO) Summit held in New York last November and the central theme of a PRMIA roundtable for CRO's held in London on April 16. With regards to managing system-wide risk, the financial sector is behind other industry sectors which have already established systemic risk management initiatives, such as the aviation industry's ASIAS program which, through sharing of data without compromising privacy or confidentiality, brings visibility to risks which may be common among multiple players, allows appropriate safety triggers to be designed and then monitored to check that they are working."
"The recent financial crisis spotlighted significant weaknesses in the capabilities of regulators. In response, the Committee to Establish the National Institute of Finance (CE-NIF) has been working to equip financial regulators and policy-makers with much better detailed data and the improved analytical capacities that are needed to understand and respond to future threats to financial stability. We are greatly encouraged by the broad and strong support for this effort on the part of financial risk management executives as revealed by the PRMIA survey. This confirms the view that the most senior risk managers charged with the risk management of their own institutions and concerned about systemic risk support the responsibilities assigned to the Office of Financial Research and recognize the value of its creation," commented Dr. Allan Mendelowitz, former Chairman of the Federal Housing Finance Board and GAO Managing Director, speaking on behalf of the CE-NIF.
Survey Highlights
82% of financial risk experts who participated in the survey consider that current systemic risk monitoring resources are inadequate
72% consider that system-wide data is critical to monitoring systemic risk
A further 73% believe that standardized data protocols would be valuable
63% recognize that government efforts to collect system-wide data would be a major undertaking but doable and worth the effort
Survey Background
The survey was conducted between 23 March and 9 April, 2010. A total of 98 risk management experts participated, drawn from PRMIA's C-Suite network of Chief Risk Officers and their direct reports located in the USA.
PRMIA is a non-profit, member-led association with more than 60 chapters around the world and over 68,000 members from 198 countries. PRMIA is dedicated to defining and implementing the best practices of risk management through education, events, networking and online resources. PRMIA offers its members two levels of risk management certification - the Professional Risk Manager (PRM) designation and Associate PRM certificate. More information can be found at www.prmia.org.
The Committee for the Establishment of a National Institute of Finance is a non-partisan, volunteer group formed by current and former financial executives, practitioners and academics, which includes 6 Nobel Economics Laureates. More information is available at www.ce-nif.org
Additional information about the survey including detailed survey results is available by contacting surveys@prmia.org
Posted by PRMIA_Marketing at May 12, 2010 08:47 AM
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