The company joined hands with the CSFI, Center for the Study of Financial Innovation, to gauge global risks. The study involved 440 bank managers and analysts in 54 countries, Russia among them.
Excessive regulation drains bank resources, encourages bureaucracy, and produces an erroneous awareness of safety, the monitoring team warns in a paper.
To bring hazards down is principal goal of regulation. Meanwhile, the respondents pointed out many reasons why it is a hazard in itself-suffice it to mention high costs of legal compliance, bad consequences on non-compliance, the smaller banks ousted from the market, and banks in general losing attraction to clients. This warning comes from Rick Mann, PricewaterhouseCoopers banking service department chief for Russia, who commented the check for Novosti.
Russian bankers share their Western colleagues' concern about seven out of the ten top hazards show the questionnaires. Russians and Westerners also share hazard evaluations for excessive regulation, Item 1, and corporate management, Item 3.
Derivative financial tools, credit and currency risks, and the finance world's high dependence on technologies are among other hazards topical for Russia and other countries alike.
Other issues revealed a considerable difference of opinions. Thus, inadequate risk management methods ranked second in the Russian monitoring, while coming 9th on the global scale, though the item led the world rating for 1996-98.
Efficient risk management is something entirely new to a majority of Russian-based banks. The Russian banking sector lags in many respects behind its counterparts in the well-established Western markets. They have done much for risk management within the several preceding years. The efforts are bringing fruit now to enhance publicity and introduce more effective control arrangements, says Philip Gudgin, partner of the business efficiency management department at the Moscow PricewaterhouseCoopers office.
Stock hazards are within Russia's top ten due to a greater volatility of the Russian market. The same concerns money-laundering hazards.
Fraud and illegal moves by the banking personnel and third persons come in 6th in the global rating, while bringing the rear in Russia.
Banks are exposed to swindles by the personnel and third persons more than any other economic sector, as the latest economic crime studies have shown. Despite all that, Russians regard fraud as an inevitable evil in business, and so shrug it off as a minor ill, explains Rick Healthby, PricewaterhouseCoopers independent finance investigator, who is considered to lead the world in his branch of expertise.