People capability survey reveals training gap for risk in financial sector
A recent people capability survey by ORX has revealed that global financial institutions are recognising the importance of people power with 83% of banks and insurers polled currently mapping skills and knowledge requirements. Reassuringly, 34% said that people development frameworks are mature and 49% said that these are currently in development.
However, whilst banks may be committed to having sophisticated frameworks in place for people and skills development, less than a quarter (24%) polled were satisfied with the training available across the industry – vital to close any skills gaps and bring new talent into the industry.
Published by ORX, the world’s largest operational risk association with a membership of over 100 banks and insurers globally, the 2021 People Capability Survey which was undertaken this month polled ORX members from banks and insurers worldwide. Reassuringly, the survey found that there has been an increased awareness in the importance of prioritising people development in operational risk as a result of Covid-19 with over a third (36%) of firms increasing their focus in the last year.
Roland Kennett, director of mmbership at ORX comments, “It is good to see that ensuring risk teams have the right talent is a key priority for many firms. The pandemic has certainly shone a bright light on the importance of not only having the right operational risk processes in place, but also having talented people on board to implement and drive further innovation.
‘But it’s clear that the provision of dedicated and specific training needs to be a key focus to ensure that employees get the skills they need to do their job well and that talent continues to thrive.”
The survey highlighted the following insights:
People capability frameworks are becoming more sophisticated
More than half of the survey respondents map skill requirements to risk roles. A further third consider their practice in this space to be mature, e.g., by defining skill proficiency levels and knowledge requirements.
Financial institutions are prioritising the acquisition of new technical skills
Digital (68.6%), resilience (54.9%) and emerging risks (54.9%) are the top three skills priorities for 2021. Framework, risk assessment and taxonomy are low priority topics suggesting there is some existing maturity in these areas.
Developing soft skills to support active risk management is a shared focus
Influencing (62.7%), collaboration (56.9%) and innovation (49%) are the top three soft skill priorities for 2021. Insurers are particularly investing in uplifting operational risk influencing skills, suggesting that the operational risk function’s internal profile is lower than in banks.
Digitalisation and the pandemic highlight a need for risk subject matter expertise
Information security (74.5%), technology (62.7%) and third-party (64.7%) risks are the top three priorities for subject matter expertise development in 2021. Data management and business continuity are also a focus, but conduct risk is surprisingly low down on the priority list.
Appetite exists for better operational risk training
2LOD (Second line of defence) people development is primarily done via self-directed learning and on the job experience, supplemented by external training. Less than a quarter are satisfied with current market provision.
Kennett adds, “With the speed of digital transformation, it’s no surprise to see the acquisition of digital skills as the number one priority in this survey, alongside resilience and emerging risks, where technology also plays a significant role. But softer skills are also crucial – best practice in collaboration and influencing, alongside innovation must underpin all effective operational risk functions.
“We undertook this survey as a benchmark on people and skills development in operational risk across the financial industry as we know that without the right skills in financial services firms, they can’t possibly reach their potential and drive innovation. With the current pace of change, we need to make sure that financial institutions have the right skills and training programmes that reflect industry priorities, both now and for the future.”