In Part 2 of our Business Case for ERM series, we will detail the 3 three crucial advantages of our Enterprise Risk Management solution that your CFO will want to know about.
Our ERM solution will...
1.) Protect against future Risk and Compliance Headcount growth
The last 3 – 5 years have seen significant growth in the number of risk and compliance roles within Financial Services. Alongside the growth in the number of roles, there has been a significant increase in salary costs of risk and compliance professionals. The growth in the number of roles is showing no signs of slowing down; according to a recent Financial Services employment Outlook for 2015 report from Michael Page recruitment, salaries are forecast to grow a further 10% – 30% during 2015.
We believe one of the key reasons for this growth is that firms are suffering from low levels of productivity within their risk and compliance functions because they have ‘thrown people', and consequently money, at the problem without adequate investment in specialist software solutions.
Consider the question – with a planned investment in a risk and compliance solution, how many additional risk and compliance professionals can the firm avoid hiring? Multiplying this number by the current average salary within your risk and compliance team will provide an indicator of future costs that could be avoided.
2.) Reduce Risk and Compliance headcount
While few firms would actually consider reducing their risk and compliance headcount under the current circumstances of increased risk management and regulatory compliance workload, this reluctance is often driven by the perception that the regulator would not want to see a headcount cut within the risk and compliance team. However, if the objectives and plans of the risk and compliance team can be delivered with better software solutions and a reduced headcount, there is an argument to be made based on the total direct and indirect people cost savings.
3.) Improved credit ratings leading to reduced cost of borrowings
Post the credit crunch, all major credit ratings agencies have placed a greater emphasis on their customer’s enterprise risk management framework and this is used as an input when setting the firm's credit rating. A number of our customers have leveraged their StratexPoint deployment to help justify credit rating improvements and received those new and improved credit ratings resulting in 0.05 – 1.5% reductions in their cost of borrowing.
Look out for our next post which describes the 3 main points when pitching to the CRO.
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