Enterprise Risk Management in Asean
Enterprise Risk Management at Asian Banks:
FROM CHALLENGES TO STRATEGIES
An Executive White Paper by James Lam
Senior Advisor, Asia Risk Management Institute (ARMI)
January 2007
A Letter from James Lam
Dear Colleague, “It was the best of times, it was the worst of times,” the opening sentence of A Tale of Two Cities, by Charles Dickens, perhaps best captures the current state of risk management at Asian banks. Supported by strong capital positions, Asian banks are well poised to play a vital role in supporting the rapid economic growth across Asia. Moreover, deregulation and consolidation provide Asian banks with unprecedented business and growth opportunities. However, banks cannot function effectively without sound risk management. Most of the chief risk officers (CROs) who participated in this research study expressed significant concerns about their readiness in meeting new business and regulatory requirements. In general, they envisaged that it will take at least 5-10 years for their banks to catch up to current international standards in risk management. In an effort to identify the unique challenges faced by Asian banks, as well as develop practical recommendations, the Asian Risk Management Institute (ARMI) has sponsored this inaugural research project. The objective of this research project is to go beyond descriptive in terms of specific challenges and issues, but also be prescriptive in terms of recommended strategies and actions. On a personal note, it has been a privilege for me to lead this research effort. Since I was born in China, and spent my early childhood in Macao, Hong Kong, and Singapore, I feel a strong sense of affinity to Asia. As a risk specialist for over twenty years, the opportunity to develop an assessment of risk management practices at Asian banks has been a valuable experience for me. On behalf of ARMI, I would like to thank Atos Origin and Economic Development Board (EDB) of Singapore for their support. I would also
FROM CHALLENGES TO STRATEGIES
An Executive White Paper by James Lam
Senior Advisor, Asia Risk Management Institute (ARMI)
January 2007
A Letter from James Lam
Dear Colleague, “It was the best of times, it was the worst of times,” the opening sentence of A Tale of Two Cities, by Charles Dickens, perhaps best captures the current state of risk management at Asian banks. Supported by strong capital positions, Asian banks are well poised to play a vital role in supporting the rapid economic growth across Asia. Moreover, deregulation and consolidation provide Asian banks with unprecedented business and growth opportunities. However, banks cannot function effectively without sound risk management. Most of the chief risk officers (CROs) who participated in this research study expressed significant concerns about their readiness in meeting new business and regulatory requirements. In general, they envisaged that it will take at least 5-10 years for their banks to catch up to current international standards in risk management. In an effort to identify the unique challenges faced by Asian banks, as well as develop practical recommendations, the Asian Risk Management Institute (ARMI) has sponsored this inaugural research project. The objective of this research project is to go beyond descriptive in terms of specific challenges and issues, but also be prescriptive in terms of recommended strategies and actions. On a personal note, it has been a privilege for me to lead this research effort. Since I was born in China, and spent my early childhood in Macao, Hong Kong, and Singapore, I feel a strong sense of affinity to Asia. As a risk specialist for over twenty years, the opportunity to develop an assessment of risk management practices at Asian banks has been a valuable experience for me. On behalf of ARMI, I would like to thank Atos Origin and Economic Development Board (EDB) of Singapore for their support. I would also