In a recent survey the majority of firms surveyed named Basel II compliance as their most important area of risk.
In the Ri$k Capital 2006 Survey recently published by ICBI, Basel II, closely followed by credit and operational risk, was named as the area of risk which would be of most importance to the respondent’s firm in the next twelve months.
Despite a majority of firms being confident of being compliant with Basel II before the 2008 deadline (71%) and seeing the delay in the US implementation as being of little concern, regulatory compliance was still top of the list (39%) as the key catalyst for firms. However, in contrast to the above confidence, a vary large majority (87%) believed that the three Basel II areas of credit, market and operational risk were still the greatest challenges that firms expected to have to tackle.
When asked what the key ingredient was for turning risk management from theory into practice, 65% responded that the answer was aligning risk management practices with the firm’s strategic objectives. Reputational risk was seen of little consequence by most but a healthy minority (30%) voted for enterprise risk management as their key issue – perhaps there were some consultants completing the survey? Although just over a third of respondents believed that credit/market risk integration was still just a theory, an impressive 41% replied that they had either achieved this or were ironing out the issues.
A surprise in the survey was that, when asked which regulation concerned them most after Basel II, respondents answered "Basel III" with MiFID coming a lowly fifth after IAS, SOX and Solvency II. Finally, respondents were asked to name their role models and Citigroup was named as the most innovative in credit risk with JP Morgan taking the laurels in both operational and market risk.
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