Research from the Chartered Institute of Internal Auditors has revealed that more than half of the fines handed out by the Financial Services Authority (FSA) in 2011 were as a result of weak internal risk management systems. Fines can be issued by the FSA when organisations breach any of the eleven principles (operational and ethical). The research announced by the Chartered Institute of Internal Auditors this week, shows that 60% of the FSA’s fines in 2011 were as a result of weak risk management systems – in 2010, 55% of fines were levied as a result of this.
Dr Ian Peters, Chief Executive of the Chartered Institute of Internal Auditors says: “The scale of these fines is meant to send a clear signal to the market that the management of risk at banks and other financial firms is under the FSA’s microscope.”
“The message for firms is that ineffective risk management and systems of internal control will be taken very seriously by the regulator.” Strategy Execution and Risk Management Software provider, StratexSystems, recognise that weaknesses and failures within risk management often occur as a result of poor communication and misunderstandings, alongside ineffective technologies. By implementing a ‘tried and tested’ solution such as those provided by StratexSystems, alongside a strong set of objectives for the risk management team, organisations enable themselves to properly review issues and challenges faced. StratexSystems have assisted a number of clients to improve their regulatory compliance – enabling them to avoid such fines.
CEO and Founder of StratexSystems, Andrew Smart said, “This figure demonstrates the number of organisations who are currently working with unsuitable, ineffective risk management software solutions. StratexSystems has been designed to allow an organisation to define their business objectives and using the Risk-Based Performance Management approach, align their risk taking to strategy ensure successful, sustainable execution of said objectives. A strong foundation to an organisation’s risk management will enable them to respond effectively to regulatory demands.”
A detailed case study on the implementation of StratexSystems can be found on the Microsoft website.