Making Risk Management Work for Wealth Managers: A PwC Survey

By Weatherill, Bruce; Prince, Tim | The RMA Journal, September 2006 | Go to article overview

Making Risk Management Work for Wealth Managers: A PwC Survey


Weatherill, Bruce, Prince, Tim, The RMA Journal


Value is added to survey results when the sponsoring organization offers its own perspectives as well. In a survey of 130 global organizations with a business line in private banking and wealth management, PricewaterhouseCoopers blends a dose of reality with encouraging prospects for risk management within wealth management units.

Getting Risk a seat at the table. Risk management should quite rightly be high on the agenda for wealth managers, and the forecast is for a quantum shift in focus from a largely negative stance to a more positive one. PricewaterhouseCoopers highlighted this through a survey of organizations with private banking and wealth management areas.

On the one hand, the survey indicates that a worrisome number of organizations continue to view risk management primarily as a loss-prevention mechanism and not a value-adding tool. Evidence of this exists in a negligible number of respondents who report that risk management is sponsored and promoted by the CEO. On the other hand, many survey participants believe that over the next three years their organizations' risk management stance will develop. Over 30% of the participants believe that their organizations' view will focus on stakeholder value, integrated risk, and value management. While this desire to move their risk management frameworks forward is not in question, how they will achieve this in such a short period of time remains to be seen.

Roughly 85% of the participants state that their risk management frameworks have been in place for fewer than five years. This is good news, as it means there has not been time for things to become stale. However, the risk environment also has changed during this time and again 85% say they are updating their current risk management framework. It would appear that perhaps the desire to move from a "risk management adding little value" stance to a "value management" stance may, after all, have substance.

Third-party caveat. Many survey participants seek to focus on their core competencies; thus, they outsource noncore parts of their business to third-party providers. While outsourcing may be relatively effective, organizations need to be aware that the third party they are placing their trust in may not necessarily have the same risk management procedures in place that they do.

Of those that have outsourced certain areas of their business, 63% believe that the third parties should have risk management that is equivalent to their own. When asked if the third parties actually have equivalent risk management frameworks, 39% said yes, and the good news is that they had done some investigation to find out. The bad news is that 36% responded "don't know," which means they actually have no idea if the third party has any type of risk management process, let alone one on a par with their own!

The reputational risk here is a very real one. A problem at the third-party provider could well have profound effects on the organization that did the outsourcing. With brand, reputation, and image being key differentiators in the wealth management world, organizations looking to outsource some of their noncore functions should ensure that third-party risk management structures meet their requirements.

Risk management must trickle down, but sometimes doesn't. For a majority of participants (55%), risk management and compliance reports are tabled quarterly at board meetings. A further 34% discuss risk and compliance even more regularly. So, the tone from the top is clearly one that is increasingly embracing risk management.

However, this stance is not necessarily filtering down through the organization. Many are aiming toward risk becoming more integrated into the core operating process, but it is a big challenge. The ideal--an enterprise-wide focus on risk management--will happen only through 1) communication with staff on the relevant policies and 2) staff ownership of risk.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Making Risk Management Work for Wealth Managers: A PwC Survey
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.