Understanding Risk Management and Compliance, What is Different After Monday, December 30, 2013 [NOOK Book]


"It is noted that the three principles with the lowest reported compliance were:

Principle 2 (data architecture/IT infrastructure),

Principle 6 (adaptability) and

Principle 3 (accuracy/integrity)

Nearly half of banks reported material non- compliance on these principles.

Indeed, many banks are facing ...

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Understanding Risk Management and Compliance, What is Different After Monday, December 30, 2013

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"It is noted that the three principles with the lowest reported compliance were:

Principle 2 (data architecture/IT infrastructure),

Principle 6 (adaptability) and

Principle 3 (accuracy/integrity)

Nearly half of banks reported material non- compliance on these principles.

Indeed, many banks are facing difficulties in establishing strong data aggregation governance, architecture and processes, which are the initial stage of implementation."

Very interesting! Who said that?

The BIS, in the "progress in adopting the principles for effective risk data aggregation and risk reporting", December 2013

The Principles aim to strengthen risk data aggregation and risk reporting practices at banks to improve risk management practices. In addition, improving banks' ability to rapidly provide comprehensive risk data by legal entity and business line will enhance banks' decision-making processes and improve their resolvability.

What I find more interesting:

"All banks indicated that they are making efforts towards closing all significant gaps by the 2016 deadline, but in some cases the expected compliance dates set by some banks seem to be overly optimistic.

More importantly, 10 banks, 33% of the population, mentioned that they currently expect to not fully comply with at least one principle by the deadline.
Some of these banks noted that the reason is large, ongoing, multi-year, in-flight IT and data-related projects."

But wait, there is more!

It is time to prepare to report risks to middle management (not only the board and senior management) ...

... to apply the risk management principles not only at the group level but also to all material business units or entities ...

... to define materiality in your organization ...

... and to assess more risks.

"In many case banks' self-assessment scope was limited to the group level and did not take into account each material business unit or entity within the group.

Supervisors agree that these Principles apply not only at the group level, but also to all material business units or entities within the group.

Second, when rating themselves on risk reporting Principles, a number of banks only focused on the quality of risk reports to senior management and the boards (not including middle management).

Third, there is evidence that many banks assessed only a few types of risk, such as credit risk and market risk, while not comprehensively covering other types of risk, such as liquidity risk, operational risk and other risks.

Fourth, very few banks offered insights into their definitions of materiality or tolerance level for manual versus automated processes for risk data aggregation and reporting.

Some banks may have used those definitions to justify higher compliance ratings than may be warranted.

These self-assessment scope limitations raise concerns that the ratings chosen by banks may not accurately reflect their compliance status, covering all material group entities, all levels of management and all types of material risk."

Why I am not surprised?

Read more at Number 1 below.

Welcome to the Top 10 list.

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Product Details

Meet the Author

George Lekatis is the General Manager of Compliance LLC, a leading provider of risk and compliance training and executive coaching in 36 countries.George has more than 17,000 hours experience as a professional speaker and seminar leader. He has worked for more than 18 years as a management consultant and educator and has demonstrated exceptional presentation and communication skills.George is the president of the Basel ii Compliance Professionals Association (BCPA, basel-ii-association.com), the largest association of Basel ii professionals in the world, and the Basel iii Compliance Professionals Association (BiiiCPA, basel-iii-association.com), the largest association of Basel iii professionals in the world.George is also president of the Sarbanes Oxley Compliance Professionals Association (SOXCPA, sarbanes-oxley-association.com), the largest Association of Sarbanes Oxley professionals in the worldGeorge is an expert witness, qualified to investigate and testify about risk and compliance management standards, policies, procedures, best practices, due care and due diligence.
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