Download Objectives of a Sound Enterprisewide Risk

Objectives of a Sound Enterprisewide Risk Management
Framework
•
Manage uncertainty embedded in business operations in order to
– increase confidence in the achievement of the bank’s objectives,
– protect its reputation and
– minimize its financial losses  reducing earning volatility.
•
Helping to achieve a sound balance between expected benefits, costs and risks of
the bank’s operations.
•
Optimizing cost/benefit trade-off between the bank’s risks and controls
•
Promoting risk awareness in bank’s culture and values.
Effectively managing risk requires a foundation designed to
turn raw data into information that supports managerial
decision making
MANAGEMENT
• Awareness of real
exposures
Economic Profit
INFORMATION
PROCESSES &
METRICS
• Loss data collection
FOUNDATION
• Risk strategy,
tolerance
• Roles and
responsibilities
• Policies and
procedures
• Risk definition and
categorization
• Indicator data
collection
• Control selfassessment
• Risk assessment
and analysis data
• Expected Loss –
how much do I lose
on average
• Unexpected Loss –
how much I could
reasonably expect to
lose in a bad year
• Control Scores –
how good are the
controls I have in
place
• Issue log data
• Follow up action
reports
Management & Control Quality
• Knowledge of
controls quality
• Cost benefit analysis
• Improved risk
mitigation and
transfer strategy
• Incentive system
All Risk Mangements Standards - although using a different
language - have some elements in common
“Analyse”
“Identify”
Establish
Environment and
Infrastructure
“Respond”
“Communicate”