Accenture_Risk_Management_Eva_Dewor_Transcript

8/7/2019 Accenture_Risk_Management_Eva_Dewor_Transcript

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HPBN Video Podcast Series

Risk Management:

From Compliance to Value

Creation-Podcast Transcript



Interviewer HPBN intro

Hello, and welcome to the Accenture

High Performance Business Network

video podcast series. Here with us

today is Eva Dewor, global director

of the Accenture Risk and Regulatory

Management service line, who will

discuss how financial services firms can

improve their performance anatomy withinsights from the Accenture 2009 Global

Risk Management Study. The study offers

insights for financial services companies

who want to transform their risk

management function into a strategic

business management tool.

Interviewer

Eva, it’s great to have you here today.

Thanks for taking the time to be with us.

Eva Dewor

It’s a pleasure to be here.

Interviewer

Eva, tell us about the research leading to

the Accenture Global Risk Management

Study?

Eva Dewor Yes, with pleasure.

Interviewer

Eva, tell us about the research leading to

the Accenture Global Risk Management

Study?

Eva Dewor

Yes, with pleasure.

So, interviews were conducted with

more than 250 risk executives from 21

countries. Thereof 74 participants come

from large banks, from capital markets

and insurance companies. 85percent

of the study participants said that they

need to rethink their overall approach

to risk management. The key focus

of change will be on realigning the

business strategy and the risk strategy.

Considering that only 25 percent of the

companies surveyed have an integrated

and scalable Risk IT infrastructure

in place there is also a strong need

to enhance the IT capabilities and

system support to measure and

manage risks at an enterprise wide

level.

Interviewer

Why conduct a survey on risk

management right now?

Eva Dewor

Well times we are in, are very critical

for the financial service industry

The purpose of the study was to

better understand the challenges

companies are facing with regard

to their risk management capability

during the financial crisis.

Many of those we interviewed told

us that they believe that the risk

management capabilities are not what

they should be and that significant

enhancements are required.

For example, risk in the past has

been measured in silos. Correlations,interdependencies and accumulations

at enterprise level have not been very

transparent.

Beside the missing transparency the

challenge is also to have the right

governance structure in place.

Many organizations and Operating

models made it too easy to ignore the

warning signals.

And finally, the changes required

consider companies risk culture

–which in the past tended to

encourage risky behavior.

So overall, the crisis increased

companies ambition level to move

out of a pure compliance oriented

risk management agenda to avalue adding approach beyond pure

compliance.

Interviewer

Okay, Eva, let’s talk about key

findings. What do you think financial

services executives will consider most

interesting?

Eva Dewor

Considering the survey results, the keyfindings address the risk management

capabilities which are currently not

perceived equal to today’s challenge.

Beside the need to meet the new

regulations expected they have to

rebuild trust and confidence of investors

and clients in the marketplaces.

There is huge pressure on financial

services firms from multiple

stakeholders to enhance their riskmanagement capabilities. The study

results confirm that fundamental

changes are required.

Risk management is not well

integrated into the overall performance

management process.

The enterprise wide risk appetite and

tolerances are not closely aligned to the

overall business strategy, as well. And

cost of risk management has increasedsignificantly over the last three years.

Regulatory requirements are seen as the

key cost driver in the past. But there are

more fundamental cost drivers stated by

the study participants like the increased

business complexity, poor data quality,

fragmented internal processes and IT

systems, and, due to the current crisis,

an increasing ad hoc information

requests.

In the light of these statements the

cost of risk management has not only

increased in the last 3 years, but will

increase further in the coming years.

when more regulation is expected.

This further cost increase is mainly

driven by the fact that the real root

causes mentioned before have not beenaddressed in the past. So, changes and

enhancements required have to consider

the existing constraints in data quality



and fragmentation of processes and IT

systems in the future as well.

Based on this background it is easy to

understand that financial service firms

plan to invest even more in the future

to enhance their risk management

capabilities.

Based on our survey results 70percent of

the companies increase risk management

investments, despite the overall cost

pressure and cost saving initiatives. But

more than 80percent of the participants

agree in their assessment that this is

not a pure compliance investment but

that strong risk management can drive

sustainability and performance of the

company.

Interviewer

If companies embark upon the risk

transformation journey, what is the

potential business value to companies

beyond risk compliance?

Eva Dewor

That is the question which is often

discussed: what is the value of risk

management beside the pure compliance

topic?

Survey participants see a benefit in

achieving the right balance between

performance and risk.

Being able to balance risk, reward and

capital requirements within the decision

making process can help to treat risk as

a competitive advantage.

Pre-requisite to generate competitive

advantages is to have an integrated risk

adjusted performance management in

place.

This includes the relevant drill downs of

key performance indicator into business

segments, products or even client

segments to ensure that risk exposure

and reward reflections are considered in

the daily processes where the business

is done.

Making decision relevant criteria

and information available to the

right people in the decision making

process will improve company’s overall

performance and sustainability.

Interviewer

Any industry-specific messages that you

have for insurers?

Eva Dewor

Yes, insurance industry is facing

Solvency II. And Sovency II has to be

implemented by 2012. Therefore, most

insurers don’t need to be persuaded of

the need to re-think their approach risk

management. They do it anyway.

So, three out of four companies believe

their organization needs improvement

and half of the respondents in our

survey said they will invest significantly

in their IT systems to comply with

the Pillar I and Pillar II of Solvency

II. However, 95percent of study

participants believe there’s a business

case for these investments. But to get

a business case out of Solvency II the

insurance industry needs to embed

risk management into their decision-making. And this is not as simple as it

sounds. It requires an integrated risk

operating model with clear governance

rules and consistent risk and

performance indicators and drill downs

into the different business segments.

This requires a high granularity of data

across the whole enterprise.

But in reality, we have a huge

heterogeneity in the IT landscape of aninsurance company. Beside the different

back-ends by branches there are often

different expert tools by type of risk in

place. Therefore, the integration of the

different expert tools, data consistency,

and data quality as well as data

governance are the core challenges to

be fixed if decision making should rely

on these information.

It’s quite ambitious to meet thedeadline by 2012, and there is still a

lot to do. It is important that insurers

take actions now and get help where

they are not able to manage all

these different tasks with their own

internal resources. Because, of course,

the sooner they improve their risk

management, the sooner they will see

the benefits.

Interviewer

Any industry-specific messages that you

have for the banking industry?

Eva Dewor

Yes, of course. The pressure on the

banking industry is significant. The

crisis resulted in a huge destruction of

market value, liquidity challenges, and

capital market pressures which called

for immediate changes in business and

risk strategy for the banking industry.

In the short term, the firms have to

ensure survival by properly managing

liquidity and by strengthening their

capital position.

Therefore many banks are focusing

their short-term activities on capital

optimization initiatives.

But beyond the survival mode, financial

service firms know that they need to

establish a holistic risk management

approach to rebuild the trust.

Much of the development over the

last three years has been positive -

building solid foundations to help the

banks survive. But the platforms have

generally not been fully exploited.

While government regulations are thedrivers for change, the adaptation

of risk and business strategies to

re-calibrate the enterprise risk tolerance

is definitely the catalyst of enterprise

risk transformation.

Fundamental change is needed to

restore credibility and to promote the

implementation of a truly integrated

approach to enterprise risk management

and this means across all entities andacross all business units of the financial

institution.



Interviewer

The current financial landscape and

troubled global economy present not

only challenges but opportunities

to re-think risk management. What

lasting thoughts do you have to share

with our listeners about the future of

risk management?

Eva Dewor

I think cost management, customer

retention and operational excellence are

especially important when uncertainty

is greatest.

Investors and other stakeholders

must be confident that robust risk

management capabilities are in place

to mitigate the kind of risk that hasundermined the global economy.

A sound risk management platform

will enable companies to launch new

ventures, to enter new markets, to

develop new products but also to sell to

new customers around the world.

Ultimately, effective risk management

is about achieving and sustaining high

performance.

InterviewerEva, in closing, if our listeners would

like additional information about the

Accenture Global Risk Management

Study, where can they get it?

Eva Dewor

Listeners can reach out to any of our

financial services colleagues around the

world in any of the Accenture offices or

they can access a copy of the full report

on Accenture dot com

Interviewer

Thanks so much for being with us today,

Eva, and for sharing insights today on

improving risk management capabilities.

Eva Dewor

You’re very welcome. I’m glad I was

able to be here.

Interviewer

You’ve been listening to Eva Dewor,

global director of the Accenture

Risk and Regulatory Managementservice line, discuss the results of

the Accenture 2009 Global Risk

Management Study. This presentation is

part of the Accenture High Performance

Business Network video podcast series.

Be sure to visit iTunes to download

more podcasts from this series. High

Performance Business materials,

including research and insights,

brochures and presentations, are also

accessible at highperformance dotAccenture dot com.

Copyright © 2010 Accenture

All rights reserved.

Accenture, its logo, and

High Performance Delivered

are trademarks of Accenture.

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Accenture_Risk_Management_Eva_Dewor_Transcript