Compliance and customer risks are the most important risk categories, say respondents to RMA’s survey.
Philadelphia, Pa. (October 11, 2006)— Financial institutions consider compliance and customer risks to be the most important categories of risk, according to the results of a risk importance survey conducted by RMA in July 2006. The results were announced today.
This survey, the third in a series of short RMA surveys about operational risk, asked respondents to rate the importance of risk categories and to ascertain how well these risk categories were described by different terms. The survey divided operational risks into eight categories, each of which was divided into between two and eight risks, for a total of 41 individual risks.
“RMA’s objective was to test with the industry some risk categories that we thought were intuitively easier to understand than the Basel risk types,” said Charles Taylor, RMA Director of Operational Risk. “Over the past 24 months our discussions with several institutions had convinced us that most business units don’t think in terms of categories like ‘Improper Practices.’ Rather, they know and care about risks associated with compliance and customer risks they associate with the Bank Secrecy Act, anti-money-laundering regulations, and know-your-customer risks.”
Another key finding of this survey, in which 61 RMA member and nonmember institutions took part, is that the most important risk in all risk categories is the privacy of customer data violation. The least important risks in all risk categories are the tell/vault shortage and market order routing errors.
All of the survey respondents are based in North America except one, which is in Africa. The results are broken out by geographic area and asset size; respondents range from under $500 million in assets to over $10 billion.
Survey Can Be Downloaded
Reviewing the results of this survey will allow institutions to compare their experiences to those of their peers in the following areas:
- The ranking of risk categories by importance.
- The ranking of importance of specific risks in each risk category.
- The analysis of risk importance by bank asset size.
The results of the survey can be downloaded from RMA’s Web site at a cost of $75 for members and $125 for nonmembers.
About RMA
Founded in 1914, the Risk Management Association is a not-for-profit, member-driven professional association whose sole purpose is to advance the use of sound risk principles in the financial services industry. RMA promotes an enterprise approach to risk management that focuses on credit risk, market risk, and operational risk.
Headquartered in Philadelphia, Pennsylvania, RMA has 3,000 institutional members that include banks of all sizes as well as nonbank financial institutions. They are represented in the association by 17,000 risk management professionals who are chapter members in financial centers throughout North America, Europe, and Asia/Pacific. Visit RMA on the Web at www.rmahq.org.
Contact:
Kathie Beans
RMA Public Relations Manager
215-446-4095