Challenges and Opportunities of Enterprise Risk Management

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Challenges and Opportunities of Enterprise Risk
Management

• SII Risk Forum
• 9th October 2007
• Christopher Forster

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Disclaimer

• This presentation and the content of these slides
  are the views and opinions of the presenter and
  are not necessarily the views or opinions of
  Baring Asset Management Limited.

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Challenges and Opportunities

• Opportunity should be seen as the flip side of
  Challenge
• Risk is a relatively new discipline we are all
  finding our feet
• Risk Regulation is quite new and still developing
• Market Practice is evolving
• Emergence of new IT solutions in the market place
  

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Vital Components

• Senior Management Commitment and Sponsorship
• Cultural buy-in by staff across the
  organisation
• Value Added output

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Challenges

• Senior Management Support they will focus on
• Cost?
• Time?
• Value Added?

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Challenges

• Cultural Buy In
• Surely this is just Audit by another name?
• Why should we really help Risk they will only
  make more work for us?
• How can we help them anyway?

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Opportunities

• Risk is here to stay regulators, management and
  clients all have risk on their radar screens
• UK is moving towards Principles Based Regulation
  it is now down to us all to get it right we
  can make market practice
• Risk techniques and practices are not yet so
  embedded that we cant change the shape of our
  future
• There is plenty of data around but wheres the
  information though?

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Value Added Benefits

• Better understand and measure our risks and
  controls
• Improve our ability to scenario plan
• Enable us to reduce or control our regulatory
  risk capital
• Help allocate capital throughout our businesses
• Aim to make Risk a profit centre

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How Do We Do It?

• Central unit or embedded in the business line?
• What about Complex/International groups will
  there be greater convergence or more specialisms
  emerging?
• Who does it what is a risk professional?
• How do we distinguish ourselves from other
  control functions?
• What do we monitor and how do we gather our
  information?
• How can we best use IT tools?
• Granular/detailed approach or high level/mission
  critical focus?
• How do we measure and quantify risks?
• What do we report, to whom and how?

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What Next?

• Regulation will continue to evolve
• Regulators and management will become more
  demanding
• The ICAAP and SREP process will establish
  benchmarks, better define requirements and market
  practice
• SYSC will be tested and challenged
• Liquidity risk will move up the radar screen
• Technology will play a much greater part
• Companies Act 2006

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The End

• Or rather, just the end of the beginning?