Risk management: financial industry too intent on regulation.

• Author: Marshall, Jeffrey
• Position: BusinessBriefs

In a world where risk screams from headlines every business day, it's hardly shocking that four in five senior executives surveyed in the financial services industry think their organization's risk awareness has improved in the past two years. But the survey, conducted by PricewaterhouseCoopers and the Economist Intelligence Unit, also suggests that financial institutions--and, by extension, most regulated organizations--have a ways to go.

Risk management, it found, is focused chiefly on meeting regulatory requirements, meaning that critical issues like protecting and enhancing the value of the franchise are getting short shrift. Specifically, the survey of 130 executives at institutions around the globe concluded that:

* A culture of risk awareness has yet to emerge.

* Compliance is not being turned into competitive advantage.

* The importance of governance is underestimated.

* Quantifiable risks are still the focus of too much attention.

"Across the industry, CFOs said that what was a challenge was not having consistent language or nomenclature on what 'risk' means, yet organizations have been trying to do that for years," says Miles Everson, a partner in the risk management practice at PwC who was interviewed about the survey. "It may be hard to conclude that everyone has sufficient awareness of...