Firms’ risk management likely ‘severely deficient’ – BNM deputy

Many organisations’ approaches to risk management are “likely to be already severely deficient” in the changing technological environment, said Jessica Chew Cheng Lian, deputy governor at Bank Negara Malaysia.

Citing an industry report, Chew said more than 90% of companies are using “disruptive technologies”, but less than half of them have conducted risk assessments to “deeply understand” the associated risks and their appetite for such risks.

“These observations point to considerable scope to improve current approaches to risk management – at a time where business lines are already venturing into unchartered territory,” Chew said in her opening speech at the Malaysian Association of Risk and Insurance Management conference in Kuala Lumpur on July 17.

Chew highlighted the growing importance of “innovative risk management”, which includes changing the role of risk managers, focusing on “risk narratives” and building resilience.

“The path forward therefore lies in making business leaders better risk managers,” Chew suggested, adding that risk managers should be pushing for “more clearly defined risk appetite frameworks” rather than providing direct support to individual business decisions.