As current business models in the wealth management space are faced with added risk pressure from expanding industry challenges, enterprise risk management (ERM) has become critical in supporting a firm’s business strategy and growth, according to a white paper.
The paper, SEI Insights: Risk Management—A Strategy for Success, argues that, because many firms operate on multiple legacy systems with different data sources and little integration between them, the wealth management industry must embrace a more systemic approach by using a single, unified platform.
However, the value provided by improved risk management comes with perceived cost implications.
While there are significant costs associated with implementing and maintaining risk management practices, the paper explores various areas of a firm’s business that can have long-term cost benefits from improved enterprise risk activities.
“Firms are naturally worried about the cost implications stemming from focusing on improving enterprise risk activities, whether it’s a negative impact to the bottom line, a strain on resources or even limitations on the ability to innovate,” says Al Chiaradonna, senior vice-president with SEI Wealth Platform. “However, they need to ask themselves whether they are taking a quick-fix approach to technology or investing in a long-term business strategy.”