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GRI ERM Roadmap - Program Overview
- 1. ERM Roadmap Program - Overview Global Risk Institute Enterprise Risk Management Roadmap An integrated program to enhancing risk management practices in financial services Program Overview
- 2. ERM Roadmap Program - Overview Introduction ”Improve risk management in the financial services sector through enterprise risk management (ERM) education and training.” In order to advance this important goal, Global Risk Institute is launching an initiative to contribute to improving ERM practices and understanding by developing of a comprehensive ERM Roadmap Program. One of Global Risk Institutes primary goals has been to:
- 3. ERM Roadmap Program - Overview Launching GRI ERM “Roadmap” GRI’s ERM Roadmap is an educational “Framework” that explains the methods and processes used by financial services organisations to manage risk & return in the pursuit of business objectives.
- 4. ERM Roadmap Program - Overview Launching GRI ERM “Roadmap” Delivered through a series of modules, the ERM Roadmap is a resource for members who wish to gain a better understand ERM practices and fundamental components to manage risk in support of business objectives. • It includes interactive workshops, business case exercises, background and research references and on-line learning components
- 5. ERM Roadmap Program - Overview Core Program Attributes • This program Specially tailored to enhancing risk management practices in the financial services sector • Organizational objectives provide overarching context for navigating through the ERM Roadmap, guided by the Risk Appetite Framework • This Program highlights the foundational role that Risk Culture plays in shaping risk/reward trade- offs
- 6. ERM Roadmap Program - Overview Key benefits Provides a general understanding of the function of ERM within an organisation and its significance to achieving business objectives. Introduces a common language to facilitate dialog and an environment for sharing of best practices amongst participant. The modular framework can be integrated into organizational training programs and individual personal development plans.
- 7. ERM Roadmap Program - Overview Overview ERM Roadmap Program
- 8. ERM Roadmap Program - Overview What is an ERM Roadmap? Most organizations today utilize some form of Enterprise Risk Management (ERM) framework. These frameworks describe their approach to identifying, analyzing, responding to, and monitoring risks and opportunities to both internal and external environment.
- 9. ERM Roadmap Program - Overview Focus on business objectives Objectives PlansExecution A financial institution’s business model is largely based on aligning risk taking capacity vs business objectives for the purpose of achieving financial returns.
- 10. ERM Roadmap Program - Overview Objectives PlansExecution Uncertainty …but objectives are impacted by uncertainty A Winning Strategy means effectively aligning • Goals, • Plans and • Execution
- 11. ERM Roadmap Program - Overview ERM Framework Aimed at Managing Uncertainty Objectives PlansExecution RIK CULTURE ERM Framework The GRI ERM Roadmap provides easy to understand visual model.
- 12. ERM Roadmap Program - Overview ERM Framework Objectives PlansExecution RISK CULTURE It illustrates 7seven key components needed for effective enterprise risk management.
- 13. ERM Roadmap Program - Overview ERM Framework Objectives PlansExecution RISK CULTURE APPETITE Risk Appetite ERM elements and their associated interdependencies. 7
- 14. ERM Roadmap Program - Overview ERM Framework Objectives PlansExecution IDENTIFY RISK CULTURE RISK CULTUE APPETITE Risk Identification ERM elements and their associated interdependencies. 7
- 15. ERM Roadmap Program - Overview ERM Framework Objectives PlansExecution IDENTIFY ASSESS RISK CULTURE APPETITE Risk Measurement & Assessment ERM elements and their associated interdependencies. 7
- 16. ERM Roadmap Program - Overview ERM Framework Objectives PlansExecution IDENTIFY ASSESS ACT RISK CULTURE RISK CULTURE APPETITE Risk Budgeting & Actions ERM elements and their associated interdependencies. 7
- 17. ERM Roadmap Program - Overview ERM Framework Objectives PlansExecution IDENTIFY CONTROL ASSESS ACT RISK CULTURE APPETITE Risk Governance & Control ERM elements and their associated interdependencies. 7
- 18. ERM Roadmap Program - Overview ERM Framework Objectives PlansExecution REPORT IDENTIFY CONTROL ASSESS ACT RISK CULTURE APPETITE Risk Measurement & Assessment ERM elements and their associated interdependencies. 7
- 19. ERM Roadmap Program - Overview ERM Framework Objectives PlansExecution REPORT IDENTIFY CONTROL ASSESS ACT RISK CULTURE RISK CULTURE APPETITE Risk Culture ERM elements and their associated interdependencies. 7
- 20. ERM Roadmap Program - Overview Lets take a look at Risk Appetite
- 21. ERM Roadmap Program - Overview Risk Appetite Objectives PlansExecution REPORT IDENTIFY CONTROL ASSESS ACT APPETITE RISK CULTURE It is important to recognize that the business strategy and the ERM processes need to be mutually reinforcing
- 22. ERM Roadmap Program - Overview Risk Appetite Objectives PlansExecution REPORT IDENTIFY CONTROL ASSESS ACT APPETITE RISK CULTURE Our approach to developing an effective risk appetite framework involves three main stages.
- 23. ERM Roadmap Program - Overview Objectives PlansExecution REPORT IDENTIFY CONTROL ASSESS ACT APPETITE Risk Appetite RISKCULTU RE Define the Risk appetite Which should include; • Organizations risk taking philosophy • Core principles and values • Quantitative targets and limits • Support key risk indictors and control points
- 24. ERM Roadmap Program - Overview Risk Appetite Objectives PlansExecution REPORT IDENTIFY CONTROL ASSESS ACT APPETITE RISK CULTURE Define the Risk appetite Embed the Risk appetite Which should include; • Embedding the risk appetite into the business, so that it can effectively inform management’s decisions
- 25. ERM Roadmap Program - Overview Control the process Which should include; • Establishing an overall control environment Risk Appetite Define the Risk appetite Embed the Risk appetite Objectives PlansExecution REPORT IDENTIFY CONTROL ASSESS ACT APPETITE RISK CULTURE
- 26. ERM Roadmap Program - Overview Next we review Risk Identification
- 27. ERM Roadmap Program - Overview Risk Identification Residual Risk The key to the risk identification module is its linkage out to the risk appetite framework.
- 28. ERM Roadmap Program - Overview Emerging Risks Risk Identification By Risk Type By Business Key Controls & Link to the Control Framework Risk Inventory Residual Risk Definition & Regulatory Expectations Inherent Risk Residual Risk Risk Types / Key Categories Risk Mitigant Link to Risk Appetite Bowtie Model Environmental Scan “Blue Sky” discussions with Board & Senior Mgt Link to Stress Testing
- 29. ERM Roadmap Program - Overview Next we review Risk Measurement and Assessment
- 30. ERM Roadmap Program - Overview Risk Measurement and Assessment This module explores approaches that may be used in the assessment and measurement of interconnected events and operating factors. Key infrastructure-related themes include considerations relating to data quality, computational capacity and model risk. See next slide for graph
- 31. ERM Roadmap Program - Overview Risk Measurement and Assessment
- 32. ERM Roadmap Program - Overview Next we review Risk Budgeting and Action
- 33. ERM Roadmap Program - Overview Risk Budgeting and Action This module deals with the wide range of management actions that organizations can undertake in order to transform an inherent/gross risk into a more preferred residual/net risk position. See next slide for diagram
- 34. ERM Roadmap Program - Overview Risk Budgeting and Action accept Return diversify leverage hedge insure restructure share swap Risk
- 35. ERM Roadmap Program - Overview Next we review Risk Governance and Control
- 36. ERM Roadmap Program - Overview Risk Governance and Control Risk Governance and Control is critical to a proper functioning financial institution. Fortunately in the area of governance there is significant regulatory guidance, which outlines best practice and expectations.
- 37. ERM Roadmap Program - Overview Policies -Key Elements -Policy Framework -In Practice Accountabilities -Business -Risk & Control Groups -Internal Audit Process -Linkage to Reporting -Internal Audit -Independent Structure -Regulatory Guidance -Options -Best practice Risk Governance and Control
- 38. ERM Roadmap Program - Overview Next we review Risk Reporting & Communication
- 39. ERM Roadmap Program - Overview Risk Reporting & Communication Effective risk reporting and communication is critical to a well-functioning enterprise risk management function. In our model we emphasize the role of the key audiences across the firm and ensuring the appropriate level of information is reaching them on a timely basis. Audience Content Format Process Data/ Technology Effective Communication is: Timely Accurate Comprehensive Consistent and comparable over time Adaptable Relevant Clear, balanced and understandable proportionate
- 40. ERM Roadmap Program - Overview Lastly we look at Risk Culture
- 41. ERM Roadmap Program - Overview Risk Culture GRI defines risk culture as the “values, systems and behaviours that direct a financial institutions risk taking behaviours”. In this module we explore the elements in detail and apply insights to identify “nine hallmarks” of a strong risk culture,
- 42. ERM Roadmap Program - Overview How to Access the Program UPCOMING ERM WORKSHOPS Risk Appetite and Governance & Control DECEMBER 1, 2016 @ 4:00 PM - 6:00 PM Risk Culture and Risk Identification JANUARY 19, 2017 @ 4:00 PM - 6:00 PM Budgeting & Action and Reporting & Communications FEBRUARY 23, 2017 @ 4:00 PM - 6:00 PM Measurement & Assessment ACCESSIBLE ONLINE THROUGH GRI WEBSITE VIDEO LIBRARY
Hinweis der Redaktion
- One of our primary goals has been to improve risk management in the financial services sector through enterprise risk management (ERM) education and training. In order to advance this important goal, Global Risk Institute is launching a comprehensive ERM Roadmap program initiative to contribute to this important ERM practice area.
- One of our primary goals has been to improve risk management in the financial services sector through enterprise risk management (ERM) education and training. In order to advance this important goal, Global Risk Institute is launching a comprehensive ERM Roadmap program initiative to contribute to this important ERM practice area. This is an integrated program, designed to enhance risk management practices in financial services organisations and improve members’ capability to participate, oversee or sponsor the implementation of ERM implementation within their organisation.
- One of our primary goals has been to improve risk management in the financial services sector through enterprise risk management (ERM) education and training. In order to advance this important goal, Global Risk Institute is launching a comprehensive ERM Roadmap program initiative to contribute to this important ERM practice area. This is an integrated program, designed to enhance risk management practices in financial services organisations and improve members’ capability to participate, oversee or sponsor the implementation of ERM implementation within their organisation.
- Aimed at newly appointed risk management practitioners and other stakeholders, including board members and regulators, who wish to attain some fundamental grounding in ERM best practices in a financial services context
- We see this program as a resource for members who wish to identify a common language and gain a better understand ERM practice.
- These frameworks effectively act as a “Roadmap” for navigating the myriad of risk/return trade-offs that organizations face in the pursuit of their business objectives and goals.
- A financial institution’s business model is largely based on aligning risk taking capacity to business objectives and goals, for the purpose of achieving financial returns.
- A Winning Strategy means effectively aligning Goals, Plans and Execution.
- The GRI ERM Roadmap provides easy to understand visual model that illustrates the process and seven key components needed for effective enterprise risk management.
- The GRI ERM Roadmap identifies these seven core ERM elements and their associated interdependencies. Our approach to developing an effective risk appetite framework involves three main stages.
- The GRI ERM Roadmap identifies these seven core ERM elements and their associated interdependencies. Our approach to developing an effective risk appetite framework involves three main stages.
- The GRI ERM Roadmap identifies these seven core ERM elements and their associated interdependencies. Our approach to developing an effective risk appetite framework involves three main stages.
- The GRI ERM Roadmap identifies these seven core ERM elements and their associated interdependencies. Our approach to developing an effective risk appetite framework involves three main stages.
- The GRI ERM Roadmap identifies these seven core ERM elements and their associated interdependencies. Our approach to developing an effective risk appetite framework involves three main stages.
- The GRI ERM Roadmap identifies these seven core ERM elements and their associated interdependencies. Our approach to developing an effective risk appetite framework involves three main stages.
- The GRI ERM Roadmap identifies these seven core ERM elements and their associated interdependencies. Our approach to developing an effective risk appetite framework involves three main stages.
- The GRI ERM Roadmap identifies these seven core ERM elements and their associated interdependencies. Our approach to developing an effective risk appetite framework involves three main stages.
- Define the Risk appetite Which should include; Organizations risk taking philosophy Core principles and values Quantitative targets and limits Support key risk indictors and control points
- Define the Risk appetite Which should include; Organizations risk taking philosophy Core principles and values Quantitative targets and limits Support key risk indictors and control points
- Embed the Risk appetite Which should include; Embedding the risk appetite into the business, so that it can effectively inform management’s decisions
- It is important to recognize that the business strategy and the ERM processes need to be mutually reinforcing
- The key to the risk identification module is its linkage out to the risk appetite framework, the control framework and the stress testing models; without strong linkages the utility of the risk identification module is significantly impaired.
- The key to the risk identification module is its linkage out to the risk appetite framework, the control framework and the stress testing models; without strong linkages the utility of the risk identification module is significantly impaired.
- This module encompasses the methods and infrastructure requirements applied in the measurement and assessment of business risks and opportunities.
- This module encompasses the methods and infrastructure requirements applied in the measurement and assessment of business risks and opportunities.
- This module deals with the wide range of management actions that organizations can undertake in order to transform an inherent/gross risk into a more preferred residual/net risk position.
- This module deals with the wide range of management actions that organizations can undertake in order to transform an inherent/gross risk into a more preferred residual/net risk position.
- Risk Governance and Control is critical to a proper functioning financial institution. Fortunately in the area of governance there is significant regulatory guidance, which outlines best practice and expectations. The GRI’s Risk Governance and Control module is outlined in Figure 6 below, and builds on this regulatory guidance.
- Risk Governance and Control is critical to a proper functioning financial institution. Fortunately in the area of governance there is significant regulatory guidance, which outlines best practice and expectations. The GRI’s Risk Governance and Control module is outlined in Figure 6 below, and builds on this regulatory guidance.
- Effective risk reporting and communication is critical to a well-functioning enterprise risk management function. In our model we emphasize the role of the key audiences across the firm and ensuring the appropriate level of information is reaching them on a timely basis. Effective Communication is: Timely Accurate Comprehensive Consistent and comparable over time Adaptable Relevant Clear, balanced and understandable
- GRI defines risk culture as the “values, systems and behaviours that direct a financial institutions risk taking behaviours”.