No Progress in Aligning
Strategy with Operational Risk Since 2014
NEW YORK and
PHILADELPHIA,
Nov. 8 – Aligning operational risk management (ORM) with
strategy could enable strategic change, improve business performance and
enhance customers’ experience for financial institutions. However, only half of
firms surveyed with less than $250 billion in assets leverage ORM to challenge
business models, according to a report by KPMG LLP and The Risk Management
Association (RMA).
According to the Operational
Risk Management Excellence Survey, larger institutions appear more advanced in aligning ORM with strategy,
with 90 percent at or above $250 billion in assets leveraging ORM to challenge
business models. For more, please click here.
“Aligning ORM with business strategy enables financial institutions to
identify, assess and mitigate risks, while adding business value,” said Phillip
Bray, Principal in KPMG LLP’s Operations and Compliance Risk services. “We’ve
observed that, for many institutions, the first priority is to resolve
regulatory issues and then take a broader look at how ORM is integrated into
strategy.”
“While prioritizing compliance is
understandable in this challenging regulatory landscape, institutions that
cannot evolve their ORM from a check-the-box approach to one that informs the
organization as a whole are not realizing the full value of their operational
risk spend,” said RMA Chief Administrative Officer and Director of Operational
Risk Edward J. DeMarco, Jr. “They are also missing opportunities that could be
transformational to their businesses.”
Other Key Findings
- Digital Transformation Spend Lacking: 20
percent at or above $250 billion and 27 percent under $250 billion are
dedicating a portion of annual budgets to digital transformation, including
automation and data and analytics.
- Regulatory Checklists: Larger and smaller
institutions agreed the following areas are most important to regulators:
- Operational risk aggregation / profile (92
percent)
- Operational risk appetite (88 percent)
- Information / cyber security (85 percent)
- Risk control self assessments (85 percent)
- Operational risk monitoring (81 percent)
- Vendor risk management (77 percent)
- Data
Reporting: 27 percent and 21 percent, respectively, of larger and smaller
firms have dashboards to report risk exposures and their impacts on business strategy
and performance. This is down from 80 percent for larger firms in 2014.
About the Survey
KPMG LLP (KPMG) and The Risk
Management Association (RMA) updated and redeployed the Operational Risk Management
Excellence Survey completed across
North America, Europe and Asia in 2014 by over 85 leading financial
institutions, including 20+
Global Systemically Important Banks
The objective is to give participants insights into leading industry ORM
practices in support of enhanced business value and heightened regulatory
expectations to help firms gauge positioning against evolving industry
practices, assess and improve their ORM frameworks, and enhance risk
management.
About KPMG LLP
KPMG is one of the world’s leading
professional services firms, providing business solutions and audit, tax, and
advisory services to many of the world’s largest and most prestigious
organizations. KPMG LLP is the independent U.S. member firm of KPMG
International Cooperative (“KPMG International”). KPMG International’s
independent member firms have 197,000 professionals working in 154 countries.
Learn more at www.kpmg.com/us.
About The Risk Management Association
Founded
in 1914, The Risk Management Association is a not-for-profit, member-driven
professional association whose sole purpose is to advance the use of sound risk
management principles in the financial services industry. RMA promotes an
enterprise approach to risk management that focuses on credit risk, market
risk, and operational risk. Headquartered in Philadelphia, Pennsylvania, RMA
has 2,500 institutional members that include banks of all sizes as well as
nonbank financial institutions. They are represented in the association by more
than 18,000 risk management professionals who are chapter members in financial
centers throughout North America, Europe, Asia/Pacific, and Australia. Visit
RMA on the Web at www.rmahq.org.
Contact:
Michael Rudnick/Pete Settles
KPMG LLP
201-307-7398/ 201-505-6065
mrudnick@kpmg.com/
psettles@kpmg.com
Frank Devlin/Stephen Krasowski
RMA
215-446-4137/215-446-4095
fdevlin@rmahq.org
skrasowski@rmahq.org