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Most Firms Use Manual, Not Automated, Risk Management

Most executives said their risk management programs are operated manually, des

Despite the wide availability of software platforms designed to automate risk management efforts, remarkably few companies are taking advantage of the technology, according to the results of a recent survey conducted by audit firm KPMG.

Just 16 percent of executives surveyed at a recent corporate governance, risk and compliance conference said their firms use some form of risk management automation. Nearly two-thirds said their risk management programs are manual, while the remaining 20 percent said they use a form of data warehousing. Perhaps the most remarkable finding was that nearly half of respondents - 47 percent - work in the highly regulated financial services industry.

"The number of respondents using the low-tech approach to managing risk surprised us, particularly when most organizations have placed such an incredible focus on their enterprisewide risk management processes after more than a decade of complex regulatory change and financial crises," said Greg Bell, a principal at KPMG.

As the U.S. financial industry marches toward possible IFRS implementation - the Securities and Exchange Commission is expected to decide whether to adopt the accounting standards in the next few weeks - it is more important than ever that financial services organizations take advantage of any advanced risk management platform they can in order to meet compliance standards.