Risk management takes hold in the asset-management industry, but challenges remain

The US asset-management industry has heeded lessons from the 2008 financial crisis, an Ernst & Young poll of more than 40 risk managers at the largest US asset-management firms shows.

By the end of 2011, many of the firms surveyed had invested significantly to enhance their risk management scope, and 90% of the survey participants said risk parameters established with business areas, executive management and boards have become part of their decision-making.

Seventy-one per cent said their risk-management mandate was well defined, and most of those who said it wasn’t had initiatives to better define their mandate.

Performance-driven strategic risks were among the top five priorities participating asset-management firms monitored and managed. Sixty-one per cent of respondents said they either monitored strategic risks or plan to do so this year.

The influence of risk managers is increasing, the survey suggested. But challenges remain—particularly at smaller firms, which are those with less than $500 billion in assets under management.

The E&Y survey found that:

  • Thirty-one per cent of risk managers at smaller firms and 29% at larger firms say they lack resources.
  • Technology and staffing are the resources most needed. Nearly half of the respondents would welcome enhancements of analytics and technology.
  • Forty-five per cent of participants considered the shifting regulatory landscape as a serious challenge.
  • About two-thirds of risk managers didn’t know their group’s annual budget and whether it has increased or decreased.
  • Thirty-eight per cent of respondents have yet to establish key performance indicators to monitor the effectiveness of risk management.
  • Particularly important risks, such as strategic and regulatory risks, do not figure prominently on the agenda of risk committees.

Sabine Vollmer ( is a CGMA Magazine senior editor.