The failure to understand fundamental risk management principles and implement sound practices were key factors leading to the global financial crisis, according to the Risk Management Institution of Australasia (RMIA).

It has released a white paper aimed at correcting what it says are misconceptions around the role risk management played in the crisis.

RMIA President Brian Roylett told insuranceNEWS.com.au research into factors contributing to the crisis found two related but incorrect common assertions.

He says RMIA does not support beliefs that conventional risk management failed and that organisational resilience, supported by corporate governance and risk management, is the new assurance process for promoting business success.

“The causes are complex, involving failures in legislation, regulation and governance practices,” Mr Roylett said.

The white paper says legislators, regulators, boards and executives failed to understand and consistently apply sound risk management principles.

Mr Roylett says examples of these failures include a focus on funding risks rather than managing them; increased reliance on computer modelling without regard to past events; and unquestioning reliance on the judgements of ratings agencies by those making critical decisions.