Enterprise Risk Management Maturity in the Philippine Banking Industry

Abstract

The study focused on determining the Enterprise Risk Management (ERM) maturity level in the Philippine banking industry to establish an industry-wide assessment of where the Philippines is in terms of ERM implementation and initiatives, and what are the further initiatives that the regulators and the banks can work on to uplift the level of ERM initiatives in the country. Specifically, the study aimed to determine maturity level in terms of (1) oversight; (2) systems; and (3) processes. A total of 295 Risk Officers were surveyed – 251 from universal banks and 44 from commercial banks, which were further stratified per bank. The questionnaire used in the study was structured based on Deloitte’s ERM Model. Results showed that in terms of oversight, the banking industry is Mature as there is tight regulation on the Board of Directors’ oversight function. In terms of systems, the banking industry is Somehow Mature as banks are using multiple IT systems across all data and reports in the preparation of risk reports to the Board of Directors. In terms of processes, the banking industry is Mature due to the presence of various risk management standards and best practices that banks can use as basis. The following are recommended: banks must continuously develop programs to build a risk aware culture, banks must allocate enough resources for the acquisition of IT systems for risk, and regulators must continuously adopt ERM best practices that are custom-fitted to Philippine banking industry.