A new survey has found that Chinese financial institutions are too focused on addressing competition and dealing with the complex financial environment at the expense of risk management.
The report, by consultancy Celent and sponsored by trading technology company SunGard, was based on interviews with risk managers from large Chinese banks, securities firms and asset management companies.
Of those financial institutions questioned, only 11% believed that their existing systems could meet their risk management needs.
All the risk managers interviewed saw the need to improve the functionality of their existing IT infrastructure, as well as their risk systems. They also felt strong need to improve business processes and for China to adopt a new risk management framework such as Basel III or Solvency II. Operational risk and market risk were revealed to be major areas of future investment for financial institutions.
The survey additionally revealed that financial institutions' investment in risk management was determined by challenges in their respective business units. The risk management capabilities among asset management firms were highly varied and would need integrated, multi-asset portfolio and risk management technologies to cope with investor sophistication and a broad range of financial products.
Neil Katkov, Celent’s senior vice president, Asia, said, "The survey found that, in order to compete effectively on the global stage -- and against both foreign and domestic competitors in China -- financial institutions need to enhance their risk management capabilities by improving their enterprise-wide analysis of risk management data, improve their technology, build on new frameworks such as Basel III and improve their business processes.”
Reporting by Jaya Menon