Managing political and ESG risk across a major financial group

A financial group came to us in search of a data-driven solution that would enable consistent political and ESG risk management across multiple divisions encompassing banking and asset management.

• Challenge

  Adequate management of political and ESG risks was a key pillar of the group’s overall value proposition, yet the different divisions within the company had varied ways of working and priorities. This challenge was exacerbated by the decentralised nature of the asset management division, which had a heavy bias towards office presence and investment in emerging markets. Therefore it was very hard for risk managers both at a group level and within different divisions to implement a globally consistent approach to risk.

• Solution

  The Institutional Investor Service – encompassing all our 150+ political and ESG risk data indices, a steady feed of daily analysis, analyst access, and 40 in-depth country risk profiles – is available across both the relevant asset management teams and multiple risk management sub-divisions on the banking side. The various teams access the same underlying data indices but configure them differently according to their asset class coverage and/or role. The teams’ use of our qualitative political risk research also varies.

• Outcome

  While risk appetites and ways of working continue to vary across the group, common access to a single robust source of political risk data analytics and written research has empowered group- and division-level risk managers to measure and hold teams to a shared standard; and helped to streamline the integration of ESG+P risk into the investment decision-making process. The group has been able to efficiently bridge major divergences in risk appetite and culture between risk managers at HQ and staff in a geographically dispersed set of operating locations.