An Executive White Paper by James Lam
Senior Advisor, Asia Risk Management Institute (ARMI)
at Asian Banks:
“It was the best of times, it was the worst of times,” the opening sentence of A Tale
of Two Cities, by Charles Dickens, perhaps best captures the current state of risk
management at Asian banks. Supported by strong capital positions, Asian banks are
well poised to play a vital role in supporting the rapid economic growth across Asia.
Moreover, deregulation and consolidation provide Asian banks with unprecedented
business and growth opportunities.
However, banks cannot function effectively without sound risk management. Most
of the chief risk officers (CROs) who participated in this research study expressed
significant concerns about their readiness in meeting new business and regulatory
requirements. In general, they envisaged that it will take at least 5-10 years for their
banks to catch up to current international standards in risk management.
In an effort to identify the unique challenges faced by Asian banks, as well as
develop practical recommendations, the Asian Risk Management Institute (ARMI)
has sponsored this inaugural research project. The objective of this research project
is to go beyond descriptive in terms of specific challenges and issues, but also be
prescriptive in terms of recommended strategies and actions.
On a personal note, it has been a privilege for me to lead this research effort. Since
I was born in China, and spent my early childhood in Macao, Hong Kong, and
Singapore, I feel a strong sense of affinity to Asia. As a risk specialist for over twenty
years, the opportunity to develop an assessment of risk management practices at
Asian banks has been a valuable experience for me. On behalf of ARMI, I would like
to thank Atos Origin and Economic Development Board (EDB) of Singapore for their
support. I would also like to thank the individual members of the ARMI Research