Concerns about regulatory risk and dissatisfaction with support from regulators continue to permeate the Asian financial market. As a result, many financial firms anticipate an increase in infrastructural investment this year, according to a survey conducted by Wolters Kluwer and Asia Risk.
More than 140 participants from across the region were involved in this survey, spanning a range of job functions, organization types and sizes. Participants answered questions concerning challenges and issues in relation to risk management and investment plans in areas such as data management and general IT infrastructure.
The results reveal that market participants face a range of challenges in risk management, and many have concerns about regulatory risk in particular. Although some firms already have automated systems and processes in place, 66% of respondents expect their organization to invest in data management infrastructure in 2016. In fact, 90% of respondents in Australia and 81% in Hong Kong plan to invest in infrastructure this year.
“The survey results demonstrate that the challenges faced by financial institutions in Asia stem from the need to respond to regulatory change. Investing in automation can help firms reduce cost, enhance operational efficiency and drive profitability,” says Chris Puype, managing director, Asia Pacific, Wolters Kluwer Finance, Risk and Reporting.
Financial risk management is viewed as a major challenge for 73% of Asia-Pacific securities firms and 70% of risk managers across the region. Meanwhile, operational risk management is seen as highly challenging by finance (60%), risk (70%) and IT professionals (100%), as well as by respondents currently working at asset management companies, insurance firms and, to a lesser extent, hedge funds.
Another major challenge is compliance. Nearly 60% of portfolio managers, 62% of respondents currently employed by asset managers and 60% of those at securities firms across Asia-Pacific highlight this as a critical issue.
The survey found that organizations must develop a better attitude towards technology, and must establish tools and systems that will allow for improved management of risk, especially as new regulations augment the requirements around reporting and transparency.