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Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
Risk Minds 2009: Risk Survey Presentation
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Risk Minds 2009: Risk Survey Presentation

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Andrew Kakabadse, Paul Moore and Dominic Carter gave this presentation on a risk survey they conducted at Risk Minds, the world's largest risk management conference on 8th December 2009. …

Andrew Kakabadse, Paul Moore and Dominic Carter gave this presentation on a risk survey they conducted at Risk Minds, the world's largest risk management conference on 8th December 2009.

Findings include:
- executives to blame for financial crisis
- cultural problem at banks NOT a regulatory problem (the cost to benefit of risk taking is not weighted correctly;
- remuneration too high; culture does not encourage effective change management
- Executives should have a right to tell their side of the story though
- full report due in Jan 2010 so check back at http://www.kakabadse.com

Published in: Business, Economy & Finance
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  • Australia-Summer 2009-Presentation by Professor Andrew Kakabadse Page
  • Australia-Summer 2009-Presentation by Professor Andrew Kakabadse Page
  • Australia-Summer 2009-Presentation by Professor Andrew Kakabadse Page
  • Australia-Summer 2009-Presentation by Professor Andrew Kakabadse Page
  • Australia-Summer 2009-Presentation by Professor Andrew Kakabadse Page
  • Australia-Summer 2009-Presentation by Professor Andrew Kakabadse Page
  • Australia-Summer 2009-Presentation by Professor Andrew Kakabadse Page
  • Australia-Summer 2009-Presentation by Professor Andrew Kakabadse Page
  • Transcript

    • 1. The RiskMinds Risk Managers Survey 2009 The results of an anonymous survey of risk professionals into the causes and implications of the 2008 banking crisis Paul Moore, Professor Andrew Kakabadse & Dominic Carter 8 th December 2009
    • 2.
      • Introduction and preliminary points.
      • Headline findings.
      • Connections to board effectiveness surveys.
      • Q & A
      • Conclusions & recommendations
      • Appendices:-
        • Summary the questions and demographics
      Agenda
    • 3.
      • 563 responses used for analysis. Independently analysed by Cranfield
      • Total responses 615. 95 attending this conference.
      • The responses come from around the globe number as follows:-
        • UK – 43%
        • US/ Canada – 10%
        • Mainland EU – 14%
        • Rest of the world – 17%
      • 47% over 10 yrs experience; 30% senior managers.
      • Bankers 25% ; asset managers 6.6% ; insurance 11% ; combination 20% ; other sector 22% .
      • More analysis by demographic breakdown being completed.
      • Detailed report available in January. Base data available next week.
      Preliminary points – Andrew Kakabadse
    • 4.
      • The inception of the idea for the survey.
      • Please complete & have others complete the survey up to 24 th Dec.
      • If you want a copy of the detailed report, you have two options:-
        • Complete the survey and the email at the end requesting results.
        • Give us your card at the event after this presentation
      • Event at Cranfield School of Management in February.
      • We will give our own conclusions and recommendations only after Q&A.
      • Results are top 3 / bottom 2 “most important” and in same order as survey
      A couple of other things before the results
    • 5.
      • Macro causes
        • Top three
          • Individual and / or collective greed – 23.8%
          • Failures in risk management - 16%
          • Wholesale funding and easy availability of capital – 15.8%
        • Bottom two
          • Accounting standards – 3.2%
          • Global circumstances beyond anyone’s control - 0.5% ......so only three people agreed with Gordon Brown and other politicians
      Headline findings – Macro causes
    • 6.
      • Contributors to failures in risk management and governance of risk
        • Top three
          • Remuneration - 21.91%
          • Risks reported but sales prioritised – 21.54%
          • Culture inhibited effective challenge - 15.36%
        • Bottom two
          • Inadequate reporting / challenge – 3.2%
          • Auditor oversight – 0.9%
      Contributors
    • 7.
      • Who was primarily accountable?
        • Executive – by a country mile! 65.62%
        • Regulators - 7.43%
        • Government - 7.05%
        • You but only - 5.5%
      • Note 10% of respondents were exec and they said the same thing!
      Accountabililty
    • 8.
      • Did respondents have major concerns in advance?
        • Majority said yes 51.8% ....why only 51%!!
        • The majority of them said by Q1 2007 - 46.3% !
      • With whom did you raise your concerns
        • Top 3
          • Majority with colleagues 53.8%,
          • Line manager 39.7%
          • Audit / risk committee 23.1%
        • Bottom two
          • NEDs 9.7%
          • Regulators 7.9%
      Did you have concerns and did you raise them?
    • 9.
      • Did you feel inhibited in raising your concerns when you should have?
        • Yes 24% . No 76% .
        • But (NB You also said culture inhibited effective challenge!)
      • How supportive is the culture in your organisation?
        • Generally – Supportive or very – 63% ; Somewhat or not supportive 38% .
        • In raising effective challenge to status quo / group think; 46% and 54% respectively.
      • Note:
        • You did not feel inhibited but your challenge was ineffective.
        • Respondents often rate their own organisations better than others!
      Tell us about the culture in your organisation
    • 10.
      • In which area are changes most required?
        • Culture (including vision, values, management style, operating principles) - 55.43%
        • Structure (including framework, processes & controls, org. design) - 27.1%
        • People - (including skills, knowledge, competence and commitment) - 17.4%
      The focus for internal change
    • 11.
      • You assessment of risk management capabilities in your organisations?
        • Risk Managers – average rating 2.18 (9, 78, 241, 187)
        • CROs - average rating 2.11 (17, 18, 194, 163)
        • Line managers 1.44 (Very worrying) (60, 221, 191, 50)
        • Regulators 1.28 (very worrying) (93, 195, 163, 34)
        • NEDs 1.23 (Very worrying) (89, 212, 126, 34)
      • How important is a professional institute as for lawyers and accountants?
        • Somewhat to very supportive – 83.2%
        • Not supportive – 16.8%
      Capabilities
    • 12.
      • What internal structural changes are required?
        • Top three
          • Better designed remuneration – 30.7%
          • More rigorous oversight and assurance programmes – 12.6%
          • Dedicated Risk Committee – 9.3%
        • Bottom two
          • Employment protection – 4.5%
          • CRO reports to NED – 2.6%
      Internal structural changes
    • 13.
      • What regulatory rule changes do you think are required?
        • Top three
          • Global harmonization - 16.4%
          • More prescription around credit and liquidity risk management – 11.1%
          • More specific guidance, standards on effective risk management – 10.9%
        • Bottom two
          • Report to NED - 8%
          • Stricter NED requirements – 4.3%
      Regulatory rule changes
    • 14.
      • Changes to supervisory practice adopted by regulators are required?
        • Supervision of the risk management culture and ethics in firms - 33.3%
        • More rigorous supervision of the effectiveness of internal risk management – 27.5%
        • Regular tripartite meetings between CRO, Chair of Risk Committee & regulator – 25.6%
        • Formal sign-off of oversight and assurance plan – 7.4%
      Regulatory supervisory practice
    • 15.
      • Changes to the operation / management of regulators?
        • Higher calibre personnel – 47.3%
        • Regulators accountable in law for their failures – 21.9%
        • Independent body to investigate regulatory failures – 14.9%
        • Supervisory resource – 7.9%
        • Minister accountable – 4.3%
      Operation and management of the regulators
    • 16.
      • Your views on regulatory philosophy locally and internationally.
        • Principles based; 74% for international and 58% for national
      • Should there have been a detailed investigation to find out what happened?
        • Yes! To establish wrong-doing 58% ; On a truth and reconciliation basis 74%
      And finally
    • 17. Risk Survey Actions Conservatives Radicals CRO reporting to NED 15% 55% Employment Protection for Risk Managers – invite challenge 23% 89% Reduced reliance on Maths Risk Models 32% 78% Regulate Credit and Liquidity Risk Management 22% 95%
    • 18. Risk Survey Actions Conservatives Radicals Stricter authorisation for NEDs 23% 90% Risk reports to NED for independence 15% 70% Sign off by Regulator to oversight/assurance plan 15% 75% Supervision of risk culture/ethics 49% 89%
    • 19.
      • Demographics
      • 10 surveys;
        • 2001; 2003/4; 2005/2006; 2007/2008; 2009/2010
      • US/UK/Australia/Turkey/Ireland/Germany/Russia/Belgium/ China/France/South Africa/Scottish Public Services
      • Interviewed NEDs, CEOs, Chairs, Executive Directors
      • Spread of responses
        • Idiosyncratic
        • Context significant
      Board / Chairman Research Page
    • 20.
      • UK/Ireland – Executive/Non Executive balance
      • Increasing importance of NEDs
      • Selection criteria for NEDs unclear
      • Few penetrating insights (NEDs) – 85% NO shared view on competitive advantage of company
      • Role of SID opaque/irrelevant
      • Some inhibition
      • Approach to governance/corporate reputation varies
      • Greater Sarbanes Oxley orientation
      • DEVELOPMENT MINDED
      • Better use of search
      • Size of NED portfolio – great variation
      Board Dynamics (UK)
    • 21. Board Dynamics (UK) /NEDs Executives v NEDs
    • 22.
      • Average Companies (Majority)
      • High inhibition
      • Defensiveness
      • Limited use of NED/external director capabilities
      • Appointed from network
      • Discouraged from talking to s taff / management
      • External Director portfolio extensive
      • Strategy/board dynamics driven by CEO / President / Chairman
      • Dismissive of CSR
      • NOT DEVELOPMENT MINDED
      • Legal culpability
      • Sarbanes Oxley - Gone too far May induce more ‘corruption’
      Board Dynamics (USA)
    • 23.
      • Well Led Companies (Minority)
        • Still 76%, President / CEO / Chairman
        • Less inhibition
        • Link skills of External/Independent Director to strategy
        • Use of search consultants
        • Appointment from network
        • Robust boards sack President/CEO
        • Legal culpability
        • Responsive to CSR
        • Robust dialogue
        • More development minded
      Board Dynamics (USA)
    • 24. Russian Directors
    • 25. South Africa Directors
    • 26. South Africa Directors
    • 27. South Africa Directors
    • 28.
      • Respect for BOARD
      • NED FUNCTIONALITY HIGH
      • Highest use of search consultants
      • Selection criteria for NEDs clearest
      • Shared view on
        • Competitive advantage
        • Differentiation
      • Individual NED – most balanced portfolio
      • Greatest Board role/contribution/added value
      • Greater clarity on value of governance/corporate reputation
      • Most development minded
      • International outlook
      • Little/No attention to CSR
      Board Dynamics (Australia) Company
    • 29. Board Dynamics (Australia) Board Performance - shared/cohesive views
    • 30.
      • Q & A panel session
      Q&A
    • 31.
      • Executive are blamed so they need a right of reply. Lets ask our executive to complete the survey and report the results.
      • Culture is key to effective risk management and regulatory supervision.
      • If the focus of the regulator should be on the effectiveness of internal risk management, we need to set clear standards as a benchmark for best practice.
      • There is good support for the creation of a professional body for financial sector risk managers. Lets set one up dedicated to the financial sector.
      • We need to work with the regulators on the calibre of staff – could we set up a secondment programme with them?
      Conclusions and recommendations for discussion
    • 32.
      • We need to train our regulators, NEDs and line managers in risk management.
        • Should all these have to spend a period in the risk department before moving on (e.g. Goldman Sachs?) So, you can’t drive the F1 car until you have spent time working with the telemetrists and engineers?
      • There needs to be a further and more fundamental think about how governance and how boards and execs / non-exec operate.
      • We need global regulatory harmonization on a principles based approach
      • We should lobby for a proper investigation on a truth and reconciliation basis to inform the public policy debate.
    • 33.
      • Lets put a top team together to work on these with the support of Cranfield – (e.g. CRO from a top bank in all the major financial centres) – to develop policy, tools, methods which can be used internally and by regulators to make this change and feed into the public policy debate?
      • Who wants to volunteer?
      Lets work together
    • 34.
      • Survey questions and demographics
      Appendix
    • 35.
      • Causes
        • Macro causes
        • Factors contributing to risk and governance of risk failures
        • Who was accountable?
        • Did you know the crisis was coming and when?
        • Did you raise concerns and with whom?
        • Did you feel inhibited from raising concerns?
      Survey questions and demographics
    • 36.
      • Internal changes required
        • In which area are changes most required:-
          • People,
          • Culture
          • Structure / Process?
        • Questions about the culture in your own organisation
        • Assessment of the capability in risk management of key players and importance of a professional body.
        • What structural changes are required?
    • 37.
      • External regulatory changes
        • What changes to the rules are required?
        • What changes to supervisory practice / approach by regulators are required?
        • What changes to the operation / management of regulators are required?
        • Your views on regulatory philosophy locally and internationally.
      • Final questions
        • Should there have been a detailed investigation to find out what happened?
        • Any other comments you have?
    • 38.
      • Demographics
        • Gender, age,
        • Years of experience in risk management, academic and professional qualifications
        • Membership of professional institutes
        • Role and involvement in risk management and Level of seniority
        • Sector - banking, asset management, insurance, other
        • Country
        • Size of organisation
        • Area of risk management in which you are involved – credit, market, operational, enterprise, regulatory, non-exec.

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