whet your risk appetite – what boards need to know abacus conference 24 th september 2012
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Whet Your Risk Appetite – What Boards Need To Know Abacus Conference 24 th September 2012. Background. W orld change R egulation and regulatory oversight R ecent experience: JP Morgan Barclays HSBC Lend Lease Macquarie Bank R ole of Director needs to evolve, but ‘how ’?. - PowerPoint PPT PresentationTRANSCRIPT
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Whet Your Risk Appetite – What Boards Need To Know
Abacus Conference24th September 2012.
Whet Your Risk Appetite - What Boards Need To Know
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www.theriskboard.com.au
Background• World change
• Regulation and regulatory oversight• • Recent experience:
• JP Morgan• Barclays• HSBC• Lend Lease• Macquarie Bank
• Role of Director needs to evolve, but ‘how’?
Whet Your Risk Appetite - What Boards Need To Know
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My aim today is:• Recent experience
• Two differing approaches
• Culture
• Conclusions
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Recent Experience
• Expected losses
• Unexpected losses
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Writings on Loss Management• COSO
• Enterprise Risk Management
• A natural consequence of taking risk
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Two Different Approaches
Compliance Approach:
• Tick the boxes
Judgment Approach:
• Experienced people
• Culture
• Reward & motivation
Whet Your Risk Appetite - What Boards Need To Know
Three Lines of Defence
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Organisation Culture• Binds people to a common mission and objectives
• Binds people to adherence to common values, ethics and behaviours
• Whole of organisation culture, not risk culture
• Centrality of Boards
• Board oversight
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Questions for Directors• Strategy and risk appetite
• Reporting of the business results
• Test embedding
• Remuneration
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Directors Approach• Up to date
• Dumb questions
• Pursue
• Ask what could go wrong
• Data vs information
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Gaps• Data v judgement• Process v experience• Risk v reward• Fear v greed• Compliance v intuition• People v process• Independence v collaboration
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Strategic Issues for the Mutual Sector
• Unexpected losses in the US
• Where to grow
• What can go wrong?
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Whet Your Risk Appetite - What Boards Need To Know
Our People:
• Bruce Auty – Principal• Michael Hamar – Principal • Andrew Williamson – Director • Bruce Hills – Director • Peter Ewers – Risk Consultant