2019 Society of Actuaries in Ireland Risk Conference

Risk Management – An Investment Firm

Perspective

Grellan O’Kelly, CRO, Davy Group

Disclaimer

2

The views expressed in this presentation and by the

presenter are provided in a personal capacity and do not

represent the views of the Davy Group.

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We share the same vision (I think!)

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Investment Firms

Insurance Firms

We have some areas of common interest

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Client suitability

Conflict of Interest

Investment advice

TRANSPARENCY

best execution

Vulnerable Clients Product Governance

Costs & ChargesSTAFF-DEALING

AMLBoard Independence

Complaints Handling

WHISTLEBLOWING

BOARD INDEPENDENCE

Firstly: Conduct Risk

Inve

stm

ent

rese

arch

Marketing & Promotions Data Protection

Terms and Conditions

Fitness & Probity

Fraud prevention

Co

ntro

l enviro

nm

ent

CULTURE

Inside trading

ASSETS

Trust

Counter Terrorist Financing

Individual

Accountability Regime

Senio

r

Executiv

e

Accounta

bility

Regim

e

SEAR

CONDUCT STANDARDS

Adm

inis

trati

ve

San

cti

on

s

Pro

cedu

res

ASP

Inside Trading

Clie

nt

Cat

ego

risa

tio

n

Crisis Management

Cyber Security

Gifts & Incentives

Sta

ff Exp

ertis

e

Risk Management – An Investment Firm Perspective

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What do these guys all have in common?

Jordan Belfort- “The Wolf of Wall Street” Tom Hayes- “Libor Scandal” Gordon Gekko: “Greed is Good”

Risk Management – An Investment Firm Perspective

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…..& the link with Culture (EQ)

Risk Management – An Investment Firm Perspective

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Secondly: Operational Risk

December’18, CBOI Fines Mr McMenamin (Senior Manager of Commercial

Lending INBS) €23,000 and is disqualified for 18 years failed to “…..adhere

to proper systems of control and records... and failure to adhere to existing

documented internal policies and procedures…”

December ‘18, CBOI fined RSA Insurance Ireland €3.5m in respect of serious

breaches. One of the reasons given was “….. a failure to have administrative

and accounting procedures and internal control mechanisms which were sound

and adequate….”

May’19, Campbell O’Connor &Co fined €280,000 by CBOI for AML failures,

citing “ …..a failure to adopt and implement adequate policies, processes and

procedures…”

July’19, Wells Fargo Bank International Unlimited Company reprimanded

and fined €5.8m by the Central Bank of Ireland for regulatory reporting

breaches and related governance failings “….. a failure to introduce and

maintain adequate systems and procedures… “

April’19, CBOI fines Bank of Montreal €1.2 million, highlighting the firm’s

“…..failure to establish and maintain effective processes and controls….”

Risk Management – An Investment Firm Perspective

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Improves Risk Culture….How?

Business Process Mapping Capability

Policies

Processes

Procedures

Controls

Risk & Control Self Assessments (1LoD)

Risk & Control Assessments (2LoD)

Business Process Re-

Engineering (BPR)

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Risk Management – An Investment Firm Perspective

Thirdly: Information Risk – 2 sides of the same coin

Information Security

Data Protection

(GDPR)

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Risk Management – An Investment Firm Perspective

Finally: Crisis Management

Reverse Stress Testing

BCP

AARs

Roles & responsibilities

Third Parties

Media Readiness

SpecialistsStaff

Comms

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But what about?

Market Risk

Credit Risk

Strategy/ Governance Risk

Technology Risk

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Risk Management – An Investment Firm Perspective

Some CRO Lessons

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Risk Management – An Investment Firm Perspective

Risk Indicators/MI – “So What?”

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Risk Management – An Investment Firm Perspective

Situational Management Challenge

Urgent & Important

- Crisis

-Regulators (1)

-Deadlines

Important, but not Urgent

- Planning

- Stakeholders (pto)

- Landscape

Urgent, but not that

Important

- Maintenance

- Regulators (2)

- Routine tasks

Not Urgent, and Not

Important

- Trivial issues

-Some meetings

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Risk Management – An Investment Firm Perspective

Stakeholder Management – Finding the time?

Stakeholders

Employees

Regulators

Professional Firms

Board & INEDs

Investors

Share holders

Clients

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Risk Management – An Investment Firm Perspective

The Power of Incremental Change – Don’t Give Up!

“It does not matter how

slowly you go as long as

you do not stop”

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Risk Management – An Investment Firm Perspective

Finally – do we all face an impossible task?

Thank You!