Risk Management Trends 2012

Risk is not an exact science, but there are specific trends that should impact decision makers this year.

Trend #1: Compliance risk for financial institutions

The Basel II international banking regulations’ recommendations include specific guidelines for ensuring banks have enough capital to cover potential losses. These accords have been revised and updated frequently to specify more stringent capital requirements and risk management.

Trend #2: Project management risk

Aerospace, construction, engineering, and oil and gas industries have huge risks inherent in their mega-sized projects. Budget overruns and missed deadlines are all too common and often involve taxpayer dollars. The trend of better management of megaproject risks has been strong over the last five years, with more sophisticated techniques being applied.

Trend#3: Operational risk for financial institutions

Operational risks for financial institutions can be more difficult to define and manage than other traditional financial risks. As margins remain tight for many lending institutions, managers are taking risks inherent in their firm’s operations more seriously.

There is a wide range of internal or external threats, i.e. disruption due to natural disasters, employee fraud, and failed transactions. Transactional risk or “failed transactions”  is gaining importance because of its widespread nature and major cost to banks.  Efficient transactional operations reduces the need to grasp at fees and helps keep banks out of trouble.

Trend #4: Audit risk

Expect to see internal auditors, particularly of banks and insurance companies, demand more risk analysis – on a continuous basis and in formal yearly reviews. Audits are more likely to be conducted as the needs of the business demand rather than only on scheduled dates.