— U.S. systemic risk aggregate drops five points

— Commodity prices are a growing concern among risk managers; now second highest risk factor

— Quarterly survey of risk management professionals also finds debt leveraging, banking health, macroeconomic factors among top influences on economic risk

Risk managers are warily optimistic regarding the American economy, according to the Risk Index from The Global Association of Risk Professionals (GARP, www.garp.org), released at GARP’s Annual Risk Management Convention in New York last week. The Risk Index, a quarterly gauge of global perception of the risk factors affecting the U.S. economy, fell to 108, from 111 the previous quarter, marking the lowest reading since the Index was first fielded in the beginning of 2010.

The Index measure of systemic risk in the U.S. economy, or how the economy suffers major crises, fell five points, from an aggregate score of 115 last quarter to 110 this quarter.

The only risk of growing concern to the American economy, according to the Index, was commodity prices, whose risk weighted contribution to the Index increased 3.5 percent during the quarter.  Of all commodity prices, energy commodities are considered the most worrying to the risk managers surveyed.

“The Index this quarter is our most positive to date, reflecting a sense of global economic recovery,” said Chris Donohue, managing director, GARP Research Center.  “However, risk managers around the world remain on high alert regarding the commodities market.  Their continued concern in this area, specifically around energy commodity prices, reflects the concern that many Americans are experiencing with the rise of consumer oil prices.”

The Risk Index survey this quarter also attempted to gauge risk managers expectations for the coming year, and a sense of likely “systemic events.” Risk managers around the world agree that corporate capital for risk management activities will likely fund risk reporting, data management and regulatory implementation projects.

Meanwhile, risk managers are most concerned about a non-U.S. national debt default, crash in the commodities market, and non-U.S. banking crisis as the next likely “systemic events” that test the global economy.

To complete the current Risk Index report, GARP researchers received responses from 620 global risk managers between December 22, 2010 and January 7, 2011.

About The Global Association of Risk Professionals

The Global Association of Risk Professionals (GARP) is a not-for-profit global membership organization dedicated to preparing professionals and organizations to make better informed risk decisions. Membership represents nearly 150,000 risk management practitioners and researchers from banks, investment management firms, government agencies, academic institutions, and corporations from more than 195 countries. GARP administers the Financial Risk Manager (FRM®) and the Energy Risk Professional (ERP®) exams; certifications recognized by risk professionals worldwide. GARP also helps advance the role of risk management via comprehensive professional education and training for professionals of all levels. www.garp.org.

Keith Campbell Dave Heinzinger
G.S. Schwartz & Co. G.S. Schwartz & Co
202-986-2152 212-725-4500 ext. 327
kcampbell@schwartz.com dheinzinger@schwartz.com

NOTE TO EDITORS: To obtain a copy of the Risk Index report and underlying data, please contact Keith Campbell at kcampbell@schwartz.com

Web Site: http://www.garp.com

Tagged with:

Filed under: Business