With the near meltdown of the global banking industry still fresh in the mind, risk management is naturally a top concern for investment firms and they are increasingly putting their faith in information technology to manage and mitigate risk going forward, a new survey by Advent Software has found.

Having surveyed senior executives at 45 investment firms, Advent found that 71 per cent of those surveyed had planned, initiated or completed a formal risk assessment in the six months preceding the survey.

With risk clearly at the top of the agenda, firms are increasingly looking to technology as a solution: Advent found that 89 per cent of respondents believed that new technology solutions will assist in managing and mitigating risk in the future, and a further 80 per cent said that their technology providers are involved “to some degree” in their efforts to mitigate risk.

There is however some way to go in investment firms’ readiness to manage risk, the survey indicated. In analysing respondents preparedness to address ten variants of risk - valuation, counterparty, trading and execution, credit, capital and liquidity, technology, data, resource (“key man”), third party and operational risk - Advent found that across all categories, an average 55 per cent of respondents considered themselves only “partially prepared” to manage the risks.

This, according to Chris Momsen, senior vice president and general manager of global accounts at Advent, “underscores the need for firms to take their own measures to improve their risk management practices.” Technology, he says, is “critical in strengthening a firm’s controls and minimizing potential failure points.”

The survey also highlighted the need for firms to be reactive to changing demands from both clients and regulators and change their operational practices accordingly. Some 79 per cent of the firms surveyed said they had experienced an increase in operational due diligence inquiries from investors, and 93 per cent said they expect a “moderate to significant” impact to their operations from coming regulatory changes.