Globals - Too Big to Govern?

I am the Vice President and Compliance Officer at Swiss Re.
Mary_Moffett@swissre.com
Mary Moffett, Swiss Re May 2017

3
BP executive’s disastrous plea of “just wanting [his]
life back” during the BP Gulf of Mexico oil spill;
Manulife is identified as having broke money
laundering legislation more than 1,200 times in its dealing
with a mystery client in 2012 and 2013.
HSBC’s CEO suggestion that he could not possibly
be expected to know what every one of his 257,000
employees was doing in connection with a tax evasion
investigation by Swiss authorities; and

Let’s explore whether Globals are, indeed, too big to govern.
Mary Moffett, Swiss Re May 2017 4

✓ A Reinsurer &
✓ A commercial line carrier (CorSO)
✓ Writing business in 42 countries

Policy
Holder
Primary
Insurer
Reinsurer
Retro
Cessionaire
Policy
Reinsurance
Contract
Retrocession
Contract
7Mary Moffett, Swiss Re May 2017

✓ From one insurer to another;
✓ Through a contractual agreement (a reinsurance contract);
✓ Under which one insurer (the reinsurer) agrees, in return for a
reinsurance premium, to indemnify another insurer (the primary insurer
or ceding company);
✓ For some or all of the financial consequences of certain loss exposures;
and
✓ Covered by the primary insurer’s policies.

Provide catastrophe protection. Stabilize loss experience.
Provide surplus relief (solvency). Manage financial ratios.

Size and complexity of
the organization.
Operational and cost
constraints.
Amount of
international, regional
and local regulation.
Fast pace of regulatory
development.

Compliance departments have typically responded by centralizing
efforts, ever more complex Global policies and guidelines.
Controls have become more complex, often misaligned.

14
Control mechanisms ensure that
strategies and instructions from
management are carried out
systematically and effectively.
Predicts and manages risks that
could hinder the organization in
achieving its objectives.
Oversees adherence to the
company's policies, procedures,
laws and regulations.

15
If these three pillars are not
integrated properly, like a badly
planned transport system, every
individual route operates, but to
some extent the network lacks the
qualities that allows the system to
work together effectively.

Step 1:
Establish a culture of compliance.
▪ Embed it in performance standards;
▪ Lead by example

Each of these three disciplines creates information of value to the
other two.
All three impact the same
✓ people;
✓ processes; and
✓ information
and ultimately contribute to operational success.

Step 2:
▪ Improve communication and coordination of efforts within the Pillars by
identifying common processes, people & information.
▪ Develop overarching structures that link all three.
▪ Set a mandate.
▪ Define roles & responsibilities.
Swiss Re examples:
Oversight Committee

20
✓
✓

Step 3:
✓ Control descriptions; and
✓ Policies and procedures.

Ca. 10
Global
Policies
Ca. 40
Global
Standards
Targeted
Standards
22
After
Before
▪ 800+ documents
▪ 55 publishing locations
▪ Inconsistent naming,
duplications, confusion
Code of
Conduct
▪ One site
▪ Consistency

Step 4:
Develop or provide Compliance and regulatory monitoring tools.
Use ones that provide an auditable trail and can accommodate
international, regional and local differences.
Automation increases efficiency and can centralize knowledge
sharing.

Step 5:
Strengthen the First Line of Defense governance function by
creating the First Line with its own:
✓ Operational enabling; and
✓ Governance structure.

▪ Interface with Compliance and Operational Risk on behalf of the business
area.
▪ Ensure that the second line requirements and directive are met.
▪ Assist with design and implementation of tools that mesh well with the
operations (rather than stand alone compliance and risk solutions).
Swiss Re examples:
Reinsurance Governance Team embedded in business areas globally.

Such a governance structure adds strength by:
✓Saving time.
✓Centralizing effort.
✓Offering consistency.
✓Providing focus.
✓Enabling decision-taking.
✓Ensuring good communication; and
✓Compliant governance into the future.

Size and complexity of
the organization.
Operational and cost
constraints.
Amount of
international, regional
and local regulation.
Fast pace of regulatory
development.

30
Control mechanisms ensure that
strategies and instructions from
management are carried out
systematically and effectively.
Predicts and manages risks that
could hinder the organization in
achieving its objectives.
Oversees adherence to the
company's policies, procedures,
laws and regulations.

32
Tone at the top
Communicate and
coordinate across the
3 Pillars
Simplify controls &
policies
Tool up!
Strengthen First Line of
Defense governance

Don’t let your organization be another example of poor corporate
governance.
Be a well governed entity, with a strong culture of compliance and
a robust governance structure.
Be a leader amongst leaders!

Globals - Too Big to Govern?

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