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Globals - Too Big to Govern?

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Does one size fit all in the complex world of Global regulation? Mary Moffett, Chief Compliance Officer from the Canadian and English Caribbean Operations of Swiss Re, a global reinsurer and commercial line writer, discusses the very real operational, system and execution considerations from both a global and local perspective.

Presentation by: Mary Moffett, VP & Compliance Officer, Swiss Re

Published in: Business
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Globals - Too Big to Govern?

  1. 1. I am the Vice President and Compliance Officer at Swiss Re. Mary_Moffett@swissre.com Mary Moffett, Swiss Re May 2017
  2. 2. 3 BP executive’s disastrous plea of “just wanting [his] life back” during the BP Gulf of Mexico oil spill; Manulife is identified as having broke money laundering legislation more than 1,200 times in its dealing with a mystery client in 2012 and 2013. Mary Moffett, Swiss Re May 2017 HSBC’s CEO suggestion that he could not possibly be expected to know what every one of his 257,000 employees was doing in connection with a tax evasion investigation by Swiss authorities; and
  3. 3. Let’s explore whether Globals are, indeed, too big to govern. Mary Moffett, Swiss Re May 2017 4
  4. 4. ✓ A Reinsurer & ✓ A commercial line carrier (CorSO) ✓ Writing business in 42 countries
  5. 5.
  6. 6. Policy Holder Primary Insurer Reinsurer Retro Cessionaire Policy Reinsurance Contract Retrocession Contract 7Mary Moffett, Swiss Re May 2017
  7. 7.
  8. 8. ✓ From one insurer to another; ✓ Through a contractual agreement (a reinsurance contract); ✓ Under which one insurer (the reinsurer) agrees, in return for a reinsurance premium, to indemnify another insurer (the primary insurer or ceding company); ✓ For some or all of the financial consequences of certain loss exposures; and ✓ Covered by the primary insurer’s policies. 9Mary Moffett, Swiss Re May 2017
  9. 9.
  10. 10. 11Mary Moffett, Swiss Re May 2017 Provide catastrophe protection. Stabilize loss experience. Provide surplus relief (solvency). Manage financial ratios.
  11. 11. Size and complexity of the organization. Operational and cost constraints. Amount of international, regional and local regulation. Fast pace of regulatory development. Mary Moffett, Swiss Re May 2017 12
  12. 12. Compliance departments have typically responded by centralizing efforts, ever more complex Global policies and guidelines. Controls have become more complex, often misaligned. Mary Moffett, Swiss Re May 2017 13
  13. 13. 14 Control mechanisms ensure that strategies and instructions from management are carried out systematically and effectively. Predicts and manages risks that could hinder the organization in achieving its objectives. Oversees adherence to the company's policies, procedures, laws and regulations. Mary Moffett, Swiss Re May 2017
  14. 14. 15 If these three pillars are not integrated properly, like a badly planned transport system, every individual route operates, but to some extent the network lacks the qualities that allows the system to work together effectively. Mary Moffett, Swiss Re May 2017
  15. 15. 16Mary Moffett, Swiss Re May 2017
  16. 16. Step 1: Establish a culture of compliance. ▪ Embed it in performance standards; ▪ Lead by example Mary Moffett, Swiss Re May 2017
  17. 17. Each of these three disciplines creates information of value to the other two. All three impact the same ✓ people; ✓ processes; and ✓ information and ultimately contribute to operational success. Mary Moffett, Swiss Re May 2017 18
  18. 18. Step 2: ▪ Improve communication and coordination of efforts within the Pillars by identifying common processes, people & information. ▪ Develop overarching structures that link all three. ▪ Set a mandate. ▪ Define roles & responsibilities. Swiss Re examples: Oversight Committee Mary Moffett, Swiss Re May 2017 19
  19. 19. 20 ✓ ✓ Mary Moffett, Swiss Re May 2017
  20. 20. Step 3: ✓ Control descriptions; and ✓ Policies and procedures. Mary Moffett, Swiss Re May 2017 21
  21. 21. Ca. 10 Global Policies Ca. 40 Global Standards Targeted Standards 22 After Before ▪ 800+ documents ▪ 55 publishing locations ▪ Inconsistent naming, duplications, confusion Code of Conduct ▪ One site ▪ Consistency
  22. 22. Step 4: Develop or provide Compliance and regulatory monitoring tools. Use ones that provide an auditable trail and can accommodate international, regional and local differences. Automation increases efficiency and can centralize knowledge sharing. Mary Moffett, Swiss Re May 2017 23
  23. 23. Mary Moffett, Swiss Re May 2017
  24. 24. Step 5: Strengthen the First Line of Defense governance function by creating the First Line with its own: ✓ Operational enabling; and ✓ Governance structure. Mary Moffett, Swiss Re May 2017
  25. 25. ▪ Interface with Compliance and Operational Risk on behalf of the business area. ▪ Ensure that the second line requirements and directive are met. ▪ Assist with design and implementation of tools that mesh well with the operations (rather than stand alone compliance and risk solutions). Swiss Re examples: Reinsurance Governance Team embedded in business areas globally. Mary Moffett, Swiss Re May 2017 26
  26. 26. Such a governance structure adds strength by: ✓Saving time. ✓Centralizing effort. ✓Offering consistency. ✓Providing focus. ✓Enabling decision-taking. ✓Ensuring good communication; and ✓Compliant governance into the future. Mary Moffett, Swiss Re May 2017 27
  27. 27. 28Mary Moffett, Swiss Re May 2017
  28. 28. Size and complexity of the organization. Operational and cost constraints. Amount of international, regional and local regulation. Fast pace of regulatory development. Mary Moffett, Swiss Re May 2017 29
  29. 29. 30 Control mechanisms ensure that strategies and instructions from management are carried out systematically and effectively. Predicts and manages risks that could hinder the organization in achieving its objectives. Oversees adherence to the company's policies, procedures, laws and regulations. Mary Moffett, Swiss Re May 2017
  30. 30. Mary Moffett, Swiss Re May 2017 30
  31. 31. 32 Tone at the top Communicate and coordinate across the 3 Pillars Simplify controls & policies Tool up! Strengthen First Line of Defense governance Mary Moffett, Swiss Re May 2017
  32. 32. Don’t let your organization be another example of poor corporate governance. Be a well governed entity, with a strong culture of compliance and a robust governance structure. Be a leader amongst leaders! Mary Moffett, Swiss Re May 2017 33
  33. 33. Mary_Moffett@swissre.com

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