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.
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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.
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
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
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
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
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
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
Notas do Editor
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”.