A survey of financial services executives reveals that less than one in ten believe that risk management is very effective at enabling managers to make better business decisions.

Risk management has received considerable industry focus but, according to a new survey, there are widespread concerns that it is still not delivering the value that it should.

The findings of a new study by Pricewaterhouse- Coopers in co-operation with the Economist Intelligence Unit, entitled 'Creating value: effective risk management in financial services', revealed that, despite considerable investment, risk managers do not seem very confident that this investment and their ongoing efforts are very effective in adding value to the business.

Only 50% of the 400 risk managers in the survey sample believed the function contributed substantially more value than it did three years ago.

The verdict from executives in other functions is worse, with only 23% saying there had been a substantial improvement.

Overall, fewer than one in ten survey respondents believed that risk management is very effective at enabling managers to make better business decisions.

PricewaterhouseCoopers partner Richard Smith said: "Senior executives concerned with bottom line performance and brand value are acutely aware of the damage that can be done, or opportunity lost, if risk is not managed properly. But our study suggests that it is still under-valued in many ways.

"As industry gradually gets to grips with requirements such as Basel II, executives inside and outside the risk function, need to punch their weight and demonstrate how risk management can have a material business impact on their whole organisation, otherwise they may risk losing the attention of their senior management."

The survey also revealed that the risk management function is often not proactively engaged by the rest of the business.

More than a half of survey respondents admitted there was no structured assessment of risk in some of the most critical business processes within their organisations and risk managers were often not involved in key business activities.

Smith continued: "Many respondents still appear to be struggling with managing effectively the less traditional and tangible sources of risk, such as reputational and people risk, despite these forms of risk ranking among the more pressing faced by financial institutions."

"This frustration, however, should not be mistaken for defeatism as the faint outlines of a redefined agenda are beginning to emerge.

"While survey respondents continue to expect regulation to be the main driver of change for the risk function, it was picked by significantly fewer respondents when they looked ahead over the next three years. More respondents now expect the aim of increasing the value of risk management to the business to drive change."