Risk and Finance Function Alignment Improves Financial Performance, Finds Survey

Financial institutions scoring themselves highly on their ability to align risk and finance functions appear to be doing better financially than their peers, according to a new study. The Economist Intelligence Unit (EIU) report, ‘Transforming the CFO Role in Financial Institutions: Towards Better Alignment of Risk, Finance and Performance Management’, reviews the current state of finance processes and potential enhancements to address new competitive and regulatory conditions.

The global survey, sponsored by Oracle Financial Services, included nearly 200 senior banking and risk executives from financial institutions, as well as in-depth interviews with 16 finance and risk executives, corporate leaders and other experts.

Sixty percent of the respondents who ranked their organisations as better than their peers at aligning risk and finance performed much better financially, with 92% performing above average. Despite the benefits, such alignment has not occurred at many banks and more than a third of financial institutions are still not well prepared for another crisis. Best practices in overcoming the technical and cultural barriers to aligning risk and finance include joint committees and risk data initiatives.

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