The many casualties of the recent economic downturn demonstrate the consequences of ineffective risk management practices, particularly in the area of financial risk.  Now that we are a few years from the start of that crisis, some question whether we are better prepared to manage financial risk exposures.  SunGard, a global provider of software and technology-related services and solutions, set out to answer this question by conducting a survey of over 200 corporate treasury professionals during the second quarter of 2012.  This white paper from SunGard provides an overview of the results from the study and gives readers a high-level perspective on the current state of financial risk management.

The Study

The SunGard study pulls together information from 222 corporate treasury professionals.  These respondents work for companies in a wide array of industries.  The companies are located all around the world; however 70% of responses came from organizations in North America and Europe.  The annual revenue of the companies in the study ranges from under $250 million to over $5 billion.

Study Results: Highlights

The following points highlight several of the key findings from the study.  The white paper features additional details and graphical representations of the study results.

  • 87% of respondents said their organization has a framework in place for managing financial risk
  • But, only 19% of respondents said they are “Very Effective” at identifying financial risk exposure at their organization
  • Market risk was ranked as the most difficult risk to manage, followed by counterparty risk. Interest rate risk was ranked as the simplest form of risk to measure.
  • 60% of respondents said they monitor risk exposure retroactively, versus monitoring risk exposure in real-time or not monitoring risk exposure at all
  • Respondents said that “Market Volatility” is the most significant challenge for their organizations over the next 24 months with regard to financial risk

The SunGard study also included questions about methods for risk measurement (e.g. Value at Risk) and risk monitoring (e.g. technology employed in forecasting). 

Overall, this white paper from SunGard illustrates the diversity of financial risk management practices in-use amongst companies today.  Regardless of how risk management is carried out though, the study results demonstrate that organizations will continue to be challenged by financial risk exposures.  Companies must continue to work towards becoming more effective at addressing financial risk.

Link: SunGard AvantGard

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ERM Enterprise Risk Management Initiative 2012-12-01