Risk Italia 2003: Growing proficiency in risk management allows more risk, says Cocco

Increasing proficiency by risk managers is allowing financial institutions to run more risk, according to Pierfrancesco Cocco, head of risk management at Banca Monte di Paschi di Siena. Speaking today at Risk’s inaugural Risk Italia conference in Milan, Cocco said banks are taking on more risk as the role of risk manager evolves from a ‘watchdog’ to fostering and managing greater concentrations of risk.

Because of risk transfer, the concentration of risk, rather than the dilution of risk, has become more important, said Cocco. “Banks are now enterprises absorbing risk, which has resulted in a strong concentration of risk in the hands of a few people.”

According to Cocco, the risk manager's responsibility now goes well beyond traditional risks. Cocco said the Basel II capital Accord has also added new dimensions to the risk manager's role. Under Basel II, risk managers will have to identify the