Optimisation and skillsets


Common themes when talking to banks about risk and compliance include the need for senior management buy-in and support; the difficulty in breaking down long-standing business divides; and a lack of expert resources. The senior management support should really be a given


– after all, compliance with the regulations is not a choice, even if there is sometimes flexibility in the level of compliance. Moreover, particularly in the area of corporate governance, it is the senior management who will find their own necks on the line in the event of any breaches. Nevertheless, banks have found that it is difficult to assign ownership of enterprise- wide risk and compliance projects. The banks’ traditional organisational make-ups will have had individual managers and departments in charge of pieces of the picture but the strategic, all-embracing approach needs a backer and owner with sufficient seniority and visibility to gain the funding and ensure the cooperation of the rest of the organisation to pull it off.


The siloed nature of data has already been mentioned. The


siloed nature of the organisation is another hurdle. In particular, risk and finance have traditionally been islands, with little or no interaction between the two. Risk and finance data needs to be reconciled and decisions need to be made about responsibility for the integrity of the data and the reconciliation process. The potential value of the finance department, or the combined finance/compliance department, needs to be understood, so that it is not seen solely as a cost centre and so that it is not deprived of investment. There is likely to be resistance to change, so sound communication and strong management are important. As with all projects, it is better to inform and involve the main practitioners at an early stage and give them a role in planning and decision-making, rather than later trying to impose on them a solution from which they have been isolated. The lack of resources is likely to apply not only to those with knowledge of different areas of risk and compliance, but also to IT skills, such as data management and business rules management. As Toronto Dominion’s Simon Barkla pointed out, people with such expertise might reside within the bank, but they already have their own day-jobs. They are also in short supply across the industry as a whole, so they become valuable commodities. The Canadian banks ‘trade [people] back and forth all the time’, he observed.


174


The assertion was backed up by Jaco van Wyk at ABSA Bank: ‘It is a huge challenge to get the right people to support this level of endeavour.’ The bank needs to recognise that the scope of the challenge is recognised by everyone. ‘The whole organisation has to be aware of what is coming down the line in terms of compliance.’ The likelihood is that banks will come to see risk and compliance not as one or more projects, but as a full-time occupation, so requiring new roles and positions. Clearly, there will be peaks and troughs in the efforts (perhaps more of the former than the latter), and people will need to be seconded for different tasks, but the overall strategy does not have an end date, as there are requirements into the foreseeable future and the nirvana of a single data source is something that will firstly take a long while to put in place and will secondly need to continue to be managed and nurtured on an ongoing basis. A ‘data guru’ is not a temporary role. In a wider concept, there is a need for the whole


organisation to make a shift to a risk culture. This is no longer about gaining a high level view of customers and activities and then throwing some reports at the regulators to keep them happy. Noreen Roberts, regulatory capital strategy head at Bank of Ireland, described it as ‘a paradigm shift in risk assessment in banks’. Nor is it sufficient to come up with models, calculations and numerical results. The output must be used in all business processes. This is the case for credit approval processes, for instance, and all other loan origination activities. Integration with front office decision-making was a cornerstone of Basel II. It also implies something similar at a management level, to create more informed business decisions, such as assessing pricing on credit cards. This complements the needs of tighter corporate governance, with pressure on senior managers to have knowledge of the models, data and output. ABSA Bank foresaw three classes of users: compliance


and regulatory users, technical risk managers and other managers and business people. The latter would increasingly require access to the compliance repository, mainly due to the requirement for data and calculations to be used by the business to determine policies and decision-making, in areas such as loan origination. ‘We will very actively be pushing it back to the appropriate people in ABSA,’ said the bank’s Dr Conor Hughes.


Risk Management Systems & Suppliers Report | www.ibsintelligence.com


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84  |  Page 85  |  Page 86  |  Page 87  |  Page 88  |  Page 89  |  Page 90  |  Page 91  |  Page 92  |  Page 93  |  Page 94  |  Page 95  |  Page 96  |  Page 97  |  Page 98  |  Page 99  |  Page 100  |  Page 101  |  Page 102  |  Page 103  |  Page 104  |  Page 105  |  Page 106  |  Page 107  |  Page 108  |  Page 109  |  Page 110  |  Page 111  |  Page 112  |  Page 113  |  Page 114  |  Page 115  |  Page 116  |  Page 117  |  Page 118  |  Page 119  |  Page 120  |  Page 121  |  Page 122  |  Page 123  |  Page 124  |  Page 125  |  Page 126  |  Page 127  |  Page 128  |  Page 129  |  Page 130  |  Page 131  |  Page 132  |  Page 133  |  Page 134  |  Page 135  |  Page 136  |  Page 137  |  Page 138  |  Page 139  |  Page 140  |  Page 141  |  Page 142  |  Page 143  |  Page 144  |  Page 145  |  Page 146  |  Page 147  |  Page 148  |  Page 149  |  Page 150  |  Page 151  |  Page 152  |  Page 153  |  Page 154  |  Page 155  |  Page 156  |  Page 157  |  Page 158  |  Page 159  |  Page 160  |  Page 161  |  Page 162  |  Page 163  |  Page 164  |  Page 165  |  Page 166  |  Page 167  |  Page 168  |  Page 169  |  Page 170  |  Page 171  |  Page 172  |  Page 173  |  Page 174  |  Page 175  |  Page 176  |  Page 177  |  Page 178  |  Page 179  |  Page 180  |  Page 181  |  Page 182  |  Page 183  |  Page 184  |  Page 185  |  Page 186  |  Page 187  |  Page 188  |  Page 189  |  Page 190  |  Page 191  |  Page 192