Risk advisory services
for financial institutions

Risk advisory services for financial institutions

1
2

Risk advisory services for financial institutions
Introduction

Good risk management doesn’t slow an organization down — it helps it go faster.

Regulatory pressure continu...
Internal audit

Companies value the role Internal Audit plays. Executives want Internal Audit to not only see what has gon...
Internal controls

Organizations with effective internal control can take on additional risk and challenges.

By combining...
Governance,
risk & compliance

An average company spends 4% of revenue on risk management activities. The EY approach to G...
Regulatory services

Regulation and compliance risks are one of the most serious challenges perceived yesterday, today and...
Contact us
Philip Rodd
Partner
Greater China Risk Leader
+852 2846 9028
philip.rodd@hk.ey.com
Aris Briones
Senior Manager
...
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E&Y China - Risk advisory for financial institutions report - January 2013

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E&Y China - Risk advisory for financial institutions report - January 2013

Regulatory pressure continues to increase for financial institutions.
In this business environment, executive management and board members
want a deeper understanding of their key business risks, how these risks are
being managed in their businesses and, in particular, how to manage risk to
create the greatest return for their shareholders.

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Transcript of "E&Y China - Risk advisory for financial institutions report - January 2013"

  1. 1. Risk advisory services for financial institutions Risk advisory services for financial institutions 1
  2. 2. 2 Risk advisory services for financial institutions
  3. 3. Introduction Good risk management doesn’t slow an organization down — it helps it go faster. Regulatory pressure continues to increase for financial institutions. In this business environment, executive management and board members want a deeper understanding of their key business risks, how these risks are being managed in their businesses and, in particular, how to manage risk to create the greatest return for their shareholders. The EY Financial Services Risk team is built on competency by addressing clients’ strategic and operational challenges, which are relevant to today’s environment. Present in all lines of the Three-Lines of Defense Model Risk Owner Management Board Strengthen your lines of defense and turn risks into opportunities The EY Financial Services Risk team assist its clients in all areas of the three-lines of defense model: • Internal Audit • Internal Controls • Governance, Risk & Compliance • Risk Taker Risk Controller Independent Assurance Business Units (independent) Risk Controlling Functions Internal Audit ! Regulatory Services Risk Our team of professionals combine: • Sector-driven professionals in banking & capital markets, asset management and insurance • Depth of knowledge and experience that comes from working for and with diverse and leading organizations • Extensive understanding of local culture, values and languages EY is one of the most globally integrated organizations in professional services. Our mindset, actions and structure are unique in our profession. We are globally connected and locally engaged. Our global approach and our ability to provide a consistent and harmonized service everywhere help us to make a difference by helping our clients achieve their potential. Risk advisory services for financial institutions 3
  4. 4. Internal audit Companies value the role Internal Audit plays. Executives want Internal Audit to not only see what has gone before, but also what comes next. They want Internal Audit to provide insights into strategic initiatives, and to share ideas that improve business performance. And they want it now. EY has provided internal audit services for over 25 years, and our goal is to help clients create leading internal audit functions. We accomplish this goal by sharing innovative and effective industry leading practices and processes with our clients. We have invested USD150 million in creating proven internal audit methodologies and technologies. Our EY internal audit service delivery platform underlies a common language and framework comprised of three independent sets of activities: Assess, Improve, and Monitor (AIM), that we will align to your business needs to address your evolving risk profile. We went to EY because of their clear leadership in internal audit - coupled with the fact that this was an important decision for us. It was a bit like the 80s when you went to IBM for your computer and Xerox for your photocopier. Our services include: Global Audit Director, UK listed bank • Internal audit outsourcing & co-sourcing • Internal audit risk assessment • Internal audit quality assessment • Functional performance assessment • Internal audit transformation • Training One of my clients is a large European insurance group developing exponentially in Asia. We helped them to tailor their internal audit program, by applying Groupwide standards, to the risks faced locally and delivered efficiently in a co-sourcing arrangement. As a former head of an internal audit department for a large insurer, I know how difficult it can be to execute the audit plan. Adding value to internal audit through practical and pertinent recommendations is paramount. I apply the EY methodology and tailor it precisely to my clients’ business products and systems. Florence Senior Manager Advisory Risk Greater China EY has internal audit relationships with more Fortune 500 companies than any other Big Four Organization. Source: 2012 Fortune 500 Market Share, EY Survey 4 Risk advisory services for financial institutions
  5. 5. Internal controls Organizations with effective internal control can take on additional risk and challenges. By combining our knowledge and experience of risks and controls, we can help your company enhance your process control efficiency and effectiveness. What can be a better reference than one that comes from within a client’s own organization? We worked with the compliance team of a very large multinational financial institution helping them review their internal controls over certain processes. They were so impressed with the quality of the work we delivered and with our people who performed above the normal call of duty, that they continue to call us and refer our team to other departments in their company whenever they need assistance not only for area of internal controls but also other business needs where our team and EY are able to assist. A greater understanding of risks and controls can result in enhanced delivery of cost-reduction activities. Rating agencies are also increasingly interested in companies’ risk management. Our services include: • Risks and controls assessment • Evaluation of operating effectiveness • Internal controls assessment and evaluation relative to strategic, compliance, operational and / or financial risks • Formulation of appropriate actions / remediation plans • Design of improvements to processes and controls • SOX 404 assessment, testing and monitoring • Pre-IPO internal controls advisory • ISAE 3402 / SSAE 16 Aris Senior Manager Advisory Risk Greater China “ Business risk is a key consideration here. Given our exposures to Eastern Europe, we worry about government risk along the lines of what happened fines as well. “ in Hungary, and we are vigilant as regards public Source: Risk Management for Asset Management, EY Survey 2012 EY is the winner of best overall consultancy by Operational Risk & Regulation for four consecutive years. Source: Operational Risk & Regulation, January 2013 EY won Consultancy of the Year 2012. Source: Asia Risk (2012) Risk advisory services for financial institutions 5
  6. 6. Governance, risk & compliance An average company spends 4% of revenue on risk management activities. The EY approach to GRC ensures that organizations not only leverage their risk spend and reduce their risk of failure, but that they strike a balance between achieving compliance and contribute to protecting and enhancing business performance. 96% of Financial Services institutions reported an increased focus on risk appetite but only 25% reported a link to business decisions. This is clearly a challenging area. Nearly 70% of organizations are highly reliant on their Governance / Risk & Compliance (GRC) activities as a safeguard against failure. However, two-thirds of companies think this spending and dependency is not matched by the value that business leaders think they currently get from their GRC functions. Therefore, there is a clear need for getting greater value from what is spent. We offer a holistic and integrated approach to managing risk that drives improved business performance. We help traditionally “siloed” or disparate risk practices to be aligned and integrated to achieve greater efficiency and value across the risk value chain. We also help executive management and board members to manage risk to create the greatest return for their shareholders. Our client was required by the regulator to address accuracy and completeness issues in their risk catalogue and related internal controls documentation. We were able to mobilize a bilingual English / Putonghua team of professionals to provide high quality deliverables to be accepted immediately by the regulator. It was a very enriching experience, I felt I was able to add a lot of value to my client. Eric Senior Manager Advisory Risk Greater China Our services include: • Enterprise risk assessment • Risk & control framework assessment • Enterprise risk management and governance (ERM) • Operational risk advisory services including advanced measurement approach (AMA) • Unauthorized trading review EY ranked 57 in FORTUNE magazine’s 100 Best Companies to Work For® for 15th year. Source: FORTUNE magazine, January 2013 EY is the winner of Most Admired Knowledge Enterprise Award for 14th year by Global Most Admired Knowledge Enterprise (MAKE). Source: Most Admired Knowledge Enterprise, December 2012 6 Risk advisory services for financial institutions
  7. 7. Regulatory services Regulation and compliance risks are one of the most serious challenges perceived yesterday, today and tomorrow. Our work on regulatory and compliance, include the issues on Anti-money Laundering, FATCA, Solvency II, Basel II & III and Regulatory Licensing. We develop and implement practical solutions to regulatory directives and evolving regulatory expectations regarding compliance, risk management, and internal control issues for financial institutions. Our team includes professionals with significant regulatory and industry experience. Anti-money Laundering We assist financial services organizations in identifying money laundering risk, reviewing controls over suspicious activity, assessment of compliance with regulations and leveraging technology. Our approach also helps clients to carefully consider important trade-offs for additional investments in AML programs and technology solutions. Our services include: • AML risk assessment • Independent controls testing • Building or enhancing existing programs • Benchmarking to local regulatory requirement and / or current market practices • Evaluating and implementing software tools and techniques • Responses to regulatory or supervisory mandates FATCA • Technical seminars • Impact assessment • Implementation support • Onboarding process assessment • Legal entity classification • Third party analysis • Pre-existing a/c review • Reporting and withholding requirement SFC Licensing • Hong Kong SFC Licensing • Bank licensing • Compliance operations and regulatory advice • Compliance due diligence / internal control reviews • Training With the many updates in anti-money laundering and counter-terrorist financing regulations, I have been leading many engagements in this field. With my, and my team’s wealth of experience, I can, not only help my clients to be compliant, but also provide value-added market insights on the current practices amongst financial organizations. My clients really value this. Vincent Senior Manager Advisory Risk Greater China One of the myths around FATCA is the Asian financial institutions are not impacted by this American tax legislation. We carried out an impact assessment for a life insurer with extended operations in Asia. It was fascinating delving into the operations and identify impacts which were unexpected. Florence Senior Manager Advisory Risk Greater China Regulatory aspects play an important role when establishing asset management structure and also in its on-going operations. More onerous regulations are forcing asset managers to invest more time and money in compliance and related activities. Effectively navigating the increasingly sophisticated regulatory environment will be a key challenge and could be a source of competitive advantage for asset managers over the next several years. Our aim is to deliver regulatory and compliance services helping asset managers to meet the relevant regulatory requirements while being flexible enough to accommodate future regulatory developments. Ying Senior Manager Advisory Risk Greater China EY came 1st in Global top 10 for 2012 Advisors. Source: Project Finance International, December 2012 Risk advisory services for financial institutions 7
  8. 8. Contact us Philip Rodd Partner Greater China Risk Leader +852 2846 9028 philip.rodd@hk.ey.com Aris Briones Senior Manager +852 2846 9970 aris.briones@hk.ey.com Eric Leung Senior Manager +852 2629 3886 eric-hk.leung@hk.ey.com Florence Carr Senior Manager +852 2629 3191 florence.carr@hk.ey.com Vincent Tang Senior Manager +852 2846 9971 vincent.tang@hk.ey.com Jerry Wu Senior Manager +86 21 2228 3965 jerry-j.wu@cn.ey.com Ying W Wang Senior Manager +86 10 5815 3520 ying-w.wang@cn.ey.com Please visit: www.ey.com/china EY | Assurance | Tax | Transactions | Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. About EY’s Advisory Services Improving business performance while managing risk is an increasingly complex business challenge. Whether your focus is on broad business transformation or more specifically on achieving growth, optimizing or protecting your business having the right advisors on your side can make all the difference. Our 30,000 advisory professionals form one of the broadest global advisory networks of any professional organization, delivering seasoned multidisciplinary teams that work with our clients to deliver a powerful and exceptional client service. We use proven, integrated methodologies to help you solve your most challenging business problems, deliver a strong performance in complex market conditions and build sustainable stakeholder confidence for the longer term. We understand that you need services that are adapted to your industry issues, so we bring our broad sector experience and deep subject matter knowledge to bear in a proactive and objective way. Above all, we are committed to measuring the gains and identifying where your strategy and change initiatives are delivering the value your business needs. © 2013 Ernst & Young, China All Rights Reserved. APAC no. 03000085 ED None. This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. ey.com/china

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