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The KRM22 Capital Markets Risk Sentiment Index, compiled by Acuiti, is a measure of how senior executives perceive a variety of risks facing their business, how prepared they are to deal with them and where firms are investing in risk management. Cyber Risk topped the list of risks followed by market risk and compliance readiness for new regulations. Internal technology risk and regulatory monitoring and reporting also featured in the top 5 risks facing firms.
The inaugural report found differences between company types as to how different risks are perceived. Market risk was the top concern for banks and proprietary trading firms and cyber risk for the buy-side and brokers. The biggest mismatch between the extent of the risk and the ability to mitigate it was seen in cyber risk while internal technology risk also presents a significant challenge for firms when it comes to their ability mitigate risks they rate as high or critical.
Respondents felt most able to manage market risk, which is second in the KRM22 Risk Sentiment Index as well as regulatory reporting, which came third. Both of which have seen significant investment in technology solutions over the past five years.
For risks that were rated as high or critical, respondents felt least able to mitigate external risks such as Brexit fallout or Climate risk.
The index also tracked increases in spending on risk management and found that brokers were most likely to have increased spending over the past six months with 55%of respondents having done so. This compares with half of banks, 35% of buy side respondents and 7% of proprietary trading firms.
“The purpose of the Capital Markets Risk Sentiment Index is to track over time how different risks present themselves to senior executives across global markets, ”says Will Mitting, founder of Acuiti. “The inaugural report finds a significant mis-match between the risks that cyberattacks present to financial institutions and how able executives feel to mitigate that risk. While cyber is the top risk for firms, it featured 10thin how confident respondents were in their ability to manage that risk. We expect to see investment in this area increase as a result.”
“I am very pleased we have launched the KRM22 Risk Index with Acuiti. The insights that the report highlights will help all of us all better understand the complex world of risk management in capital market,” says Keith Todd, KRM22 CEO and Executive Chairman. “KRM22 is dedicated to delivering an array of risk management tools through our Global Risk Platform from our own IP as well as partner applications.”
To download the report, click here: Acuiti & KRM22: Capital Markets Risk Sentiment Index