Debt Leverage Still Leading Risk Factor in American Economy, Says GARP Risk Index

By The Global Association Of Risk Professionals garp, PRNE
Thursday, September 30, 2010

Quarterly survey of risk management professionals also finds market volatility, macroeconomic factors among top influences on economic risk

NEW YORK and LONDON, October 1, 2010 - Debt leverage is still the key risk factor affecting the American
economy, despite the increased influences of a "jobless recovery" and other
macroeconomic factors, according to the second quarterly Risk Index from The
Global Association of Risk Professionals (GARP,,
released today. The Risk Index, a quarterly gauge of global perception of the
risk factors affecting the U.S. economy, found overall perception of the
riskiness of the economy unchanged, as the Central Risk Index remained steady
at 109.

The Index's largest gaining factor affecting perception of risk was
market volatility, which increased 6.5 percent. Other factors comprising the
index include banking health, credit spreads, commodity prices, equity values
and operational risk. The Index measure of systematic risk in the U.S.
economy, or how the economy suffers major crises, has dropped two points,
from an aggregate score of 115 in the first quarter to 113 this quarter.

"The Index this quarter reflects some of the prevailing hypotheses about
recovery from the global economic crisis," said Chris Donohue, managing
director, GARP Research Center. "Not surprisingly, risk managers around the
world remain wary of the markets and the macroeconomic factors in the
economy. However, while debt leverage is seen as one of the most risky pieces
of the U.S. economy across the board, it is interesting to note that risk
professionals in China, which holds nearly a trillion dollars of U.S. debt,
express a high level of confidence in the US economy."

Across the globe, risk managers in China showed the least concern over
the state of the economy, while Canadian risk managers showed the most
across-the-board pessimism over risk in the economy. Also, Risk Managers in
Asia and Europe felt overwhelmingly (both regions over 70 percent) that
legislation limiting the trade of derivative products would have a high or
very high impact on stabilizing the American banking system, while fewer than
half of American risk managers felt the same way.

To complete the current Risk Index report, GARP researchers contacted 280
risk managers during the month of July.

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(R)) and the Energy Risk Professional (ERP(R)) 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.

Keith Campbell, +1-973-945-6514, kcampbell at; or Izabella Safiyeva, +1-212-725-4500 ext. 329, isafiyeva at; MEDIA ONLY: To obtain a copy of the Risk Index report and underlying data, please contact Keith Campbell at kcampbell at

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