Welcome to Barclay Simpson’s 2010 Risk Management Market Report. This is the 20th year we have produced a market report summarising and analysing recruitment trends in corporate governance and the sixth year we have produced a specialist report on risk management. We place great value on professional reaction to the Report and would appreciate your comments.
An overview of the corporate governance recruitment market and an in-depth analysis of the economic and business trends that are likely to shape the overall recruitment market can be found in our Corporate Governance Market Report.
Top Line Conclusion
A year ago, many people had a sense of foreboding. We reported that the consensus economic forecast was for a further 1.5% contraction in the economy and a budget deficit of £78 billion. We noted at the time that there was the potential for a much worse outcome. Given the 4% actual economic decline for 2009 and £175 billion projected deficit, our pessimism was not misplaced.
We have believed and have reported for some years that the UK economy was badly imbalanced. Whilst we have been bearish on the economy, we have been bullish on the prospects for corporate governance. However, we should admit that given the unprecedented decline in the UK and wider world economy during 2009, we are genuinely surprised how sustainable employment in corporate governance has proven to be.
There is no doubt that the banking industry essentially hijacked the UK economy and the debate about the future of corporate governance has, not unreasonably, become focused on it.
A banking system whose social utility was at least partly to manage, distribute and control risk has become a source of risk and instability and has forced the government to distort its economic priorities.
Given that the executive management of many banks drove their businesses off a cliff, it does pose the question, what were their risk management departments doing? It is clear that the banks’ risk models failed to recognise the level of risk that complex financial instruments carry in an interconnected world. Fortunately, in spite of the apparent failure of risk management and corporate governance in the banking sector, risk management has emerged as an essential part of the solution.
Whilst a slimmer financial services industry is in the process of emerging, it will be an industry that will be more closely managed, controlled and regulated. For risk managers and other areas of corporate governance, that is something for which we should all be grateful. |
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