Regulatory risk is a top priority for risk managers at major organisations, who now expect regulatory scrutiny to become more intense over the next three years, a new survey shows.

Regulatory risk is a top priority for risk managers at major organisations, who now expect regulatory scrutiny to become more intense over the next three years, according to the [tag|EY|]EY[/tag] Risk Management for Asset Management survey.

The survey revealed that 76 per cent of respondents cited regulatory risk as the top issue “keeping them awake at night”, up from 67 per cent in 2012. EY said that managers have seen heightened regulatory focus on governance controls and frameworks, especially front-office governance controls, as well as investor protection and outsourcing risks. The survey showed that 56 per cent of respondents were concerned about managing regulatory expectations around outsourcing risk.

“Risk management is being taken more seriously than ever before, especially the management of regulatory risk. This is not being driven by the regulator alone. In the last year there has been a notable increase in focus on risk management from the leadership, non-executive directors, and the client as well. Non-execs in particular are driving more risk reviews as they look for comfort that the internal and external risk profiles are appropriate,” said Gillian Lofts, head of UK asset management at EY.

Looking ahead, managers expect the burden of regulation to grow over the next three years: 82 per cent expect cross-jurisdictional complexities to increase; 80 per cent feel that regulatory scrutiny will become more intense; and 76 per cent said that there would be increased overlap from new regulatory directives, the firm said.