2012 Survey for Japanese Risk Managers
The following is an excerpt from the Executive Summary of the report:
by Kenji Fujii and Yuji Morimoto
This survey was conducted early this year by the Tokyo Risk Managers Association (TRMA) as a follow-up to the TRMA financial crisis questionnaire in 2009.
Following is the summary of what we learned from the survey result.
- First of all, the involvement of senior management in risk management has increased.
- On the other hand, there were many responses stating that effective discussions at Risk Management Committee meetings had not progressed very much; that the status and authority of Chief Risk Officers (CRO) had not been strengthened very much; and that sufficient resources are still not being allocated to Risk Management Divisions. These responses suggest that although senior management are expressing an increased interest in risk management, this interest does notnecessarily tie into concrete reinforcements.
- Regarding the risk appetite, more than half of respondents were of the opinion that risk should be used as a standard when creating business plans, but at the same time, it became clear that this approach has not penetrated or become entrenched as part of actual operations.
- Regarding capital management, two opinions were at odds; the opinion that regulatory capital and economic capital are approaching one another, and the opinion that they are drifting apart. Responses also indicated continued struggles with regard to the structure of approaches and frameworks regarding capital management, and a greater number of respondents expressed the opinion that there is meaning in creating recovery and resolution plans.
- Regarding stress tests, there were indications that integrated stress tests are being employed more broadly, and it appears that reports to management on test results have already become commonplace. The issue raised most frequently with regard to stress tests was the “establishing appropriate scenarios.”
- Although many respondents indicated that liquidity risk management has improved, these opinions were not yet in the majority. There were also conflicting opinions regarding whether or not the strengthening of liquidity risk regulations reduced liquidity risks.
- Regarding risk data, although many respondents said that there have been improvements, it became clear that many members are concerned about the fact that this data continues to be stored in various systems in a scattered fashion.
The entire paper is available here.