What’s giving CROs headaches today

Managing risk and ensuring compliance are the two most commonly-cited challenges in a Genpact Ltd. Survey of 115 senior financial sector risk executives, with two-thirds of all respondents placing them among their top three priorities.

While that’s not surprising, given their duties, the survey turned up more. This includes such concerns as increasing customer satisfaction (53%) and reducing costs (44%). These surprising findings highlight the growing role of the chief risk officer’s job.

Many perceive improvements to certain functions—including stress testing, anti-money laundering/know your customer, and Dodd-Frank compliance initiatives—as having the greatest potential to impact these challenges, but many of these same functions are not yet mature.

In one such example, 77% of respondents see stress testing as having the greatest impact on managing risk, yet nearly four out of ten indicate that the function has not yet reached maturity within their organizations.

At the industry level, significant differences exist between the perceived importance of the functions surveyed and the most effective operational levers.

The majority of bank respondents see the improved use of technology as most critical to the AML/KYC function while 56% indicate advanced organizational structures—using outsourcing and shared services—were most impactful for the collections function.

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For capital markets risk executives, 63% say technology is a critical lever for stress testing while the same majority see a material impact in Dodd-Frank compliance resulting from advanced organizational structures.

Insurers see a more even distribution across critical risk functions in terms of the importance of technology, process reengineering, and organizational structures.

Cumulatively, respondents estimate the potential impact of these levers at nearly $600 million per firm on an annual basis.

"Consolidation in the financial services industry, combined with new regulatory requirements, has highlighted the need for a single source of data that cuts across the finance and risk departments," says Manish Chopra, Genpact's senior vice-president of Global Risk Services. "The companies that are embracing operating models that better utilize technology and sustainable talent acquisition techniques will find themselves well ahead of the curve."

Download “Transforming Risk Management In The Financial Sector Through Advance Operating Models”  [Registration required]