Reducing Regulatory Capital


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CEI Compliance is the UK's fastest growing risk & regulatory consultancy and provides associate opportunities to consultants and cost effective value to financial services and other regulated companies.

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Reducing Regulatory Capital

  1. 1. By Doing What We Designed for a FTSE 100 Company
  2. 2. In The UK Financial Services World, as it is acrossEurope, Regulatory Capital is calculated across thethree pillars or the Internal Capital AdequacyAssessment Process.The main findings of the ICAAP analysis are:• how much and what composition of internal capital the firm considers it should hold as compared with the capital resource requirement (CRR) ‘pillar 1’ calculation, and• the adequacy of the firm’s risk management processes.
  3. 3. The Capital Resource Requirement (CRR) is theresult of the Pillar 1 calculation and is mainly fixedoverhead based, including winding down costs ofthe business or parts of it. Apart from accountancyefforts and a costs moratorium, there is little to bedone to assist in this area from our perspective as arisk and compliance consultancy.• However, where we score and can make a big difference is in the adequacy of the firm’s risk management processes.• We saved a firm almost 20% of their Individual Capital Guidance (ICG) by helping define their risk management package
  4. 4. • Implement a fully operational and effective risk governance structure enabling the timely identification, mitigation and reporting of the group’s key risks along the chain of management up to the Board of Directors• Design and execute on an integrated control environment coordinated across all support functions to optimise the balance between efforts dedicated to controls improvement and areas of risks.• Achieve the consistent integration of the risk tools and methodologies in the firm’s financial processes to inform the firm’s strategic decisions and ensure that the group remains within its risk appetite across all risk categories
  5. 5. • The Credit Risk system needed urgent upgrading to take in all global feeds and be tested against the BCP.• The risk identification and monitoring system required significant re-structuring to remove the one dimensional aspect of the risk reporting to a multi- level COSO cube based structure – a challenge with the existing software (that had recently been relicensed and increased functionality applied).• The Firm’s Risk Appetite needed to be clearly identified across the various risk categories and divisions to provide a clearer point to measure vulnerabilities and prioritise risks for mitigation action. The original method of risks were confused combined were cumulative in their assessment when the impact should have been totalled.
  6. 6. • The two risk consultants analysed the current risk database and quickly identified the single facet to the risks, calling for a complete overhaul of the list of potential standard risks on a triple layered standard, providing Management Information to the required level in a robust, consistent and appropriate standard.
  7. 7. • Identification of the risks then provided a clearer and more accurate risk reporting regime which once identified could then be plugged into the entire business, creating business type specific scenarios for risk assessment purposes, feeding into the ICAAP calculations.• This then provided an overall and measured risk assessment that provided quantifiable losses over previous qualitative measures.• This had the benefit of saving over 18% of the regulatory risk capital requirement• Translating into almost £100M!!!
  8. 8. • Total time spent 10 months.• Resource Cost 5.3% of savings over 1 year.• Resource Cost 1.06% of savings over 5 years• Internal Cost approx. £350,000• Senior Management sleep value - priceless
  9. 9. • You are always dealing with the principal when you are dealing with my firm. This means that I am the relationship manager and there is no junior partner to whom responsibility will be transferred. There is no decreased accountability, no "hand-off" to a less- informed colleague. If your interests are at stake continually, shouldn’t you reasonably expect my continual involvement?• We can usually provide resources on a "just in time" basis. That is, our projects do not have to cover excessive overhead, such as multiple offices, large administrative backup, recruiting, partner perks, etc. We are organized to efficiently provide everything that you, as the buyer needs, but nothing more than that which means that you are paying for value and results and only minimum overhead.
  10. 10. • There is more likelihood of your privacy and confidentiality being observed with fewer people working on the project. We (and/or the few people we might also involve) are constant which means that there isn’t the need to sift through dozens of differing perceptions.• We’re faster. We can respond to requests quickly, and return all calls within four hours which means to you that there is no need to worry about a bureaucracy, delays and unknown people on the other end of the phone
  11. 11. • Since we handle fewer concurrent projects than larger firms, our attention is focused on the job at hand. This means that you don’t have to "compete" with another dozen or so of our clients, which may be larger, paying more or are more time-demanding. We structure our work so that every client receives maximum attention.• Your investment is controlled. There is no "meter running". We work for a fixed, value- based, project fee. Large firms can’t afford to do that as readily because of all the people involved and their own insistence on measuring their success by billable hours. We measure our success by client objectives reached, not in “time units”.
  12. 12. • The expertise that larger firms use is often white- labelling for them by a pool of consultants available in the marketplace at any one time. We select our consultants from practising subject matter experts which means that you obtain the same or better expertise for less money, because;• Inevitably, we are less expensive. There are economies to using someone who can base their fees on each situation and not on a pre- determined service scale or need for reaching a practice quota. This means quite simply better value to you.
  13. 13. Click Mouse Reveal Next Phase Phase 1 We will conduct an initial appraisal at our cost – only charging for expenses Phase 2 We will make a proposal based on our appraisal with your outcomes and needs Phase 3 We will discuss the precise scope with you and provide you with a project price Phase 4 We will complete the work to your original scope and satisfaction
  14. 14. We have a wealth of Financial Services Experience, and due tothe remedial nature of our work forming over 60% of ourbusiness and that is conducted under a Non Disclosure Regime,we cannot demonstrate every client.
  15. 15. We Do have a largeamount of experience in anumber of other fields andindustries within the majorutilities and even LocalAuthorities.
  16. 16. We can provide all manner of assistance in• Initial risk assessment or audit — an initial analysis to identify higher risk areas of the business and weaknesses in procedures. We also do risk management design.• Business development — business analysis advice or advice on particular issues — for example, how your firm is Treating Customers Fairly and an action plan for implementing TCF across your business.• Help with setting up procedures — for example procedural manuals for recruitment, training and competence, complaints handling and anti-money laundering. May also include templates for disclosure documents, fact-finds and registers.• File audits — checks to ensure that procedures are being followed and identify good practices and weaknesses• Complaints Handling – cost effective and project managed from start to finish making your response robust and consistent
  17. 17. We can provide all manner of assistance in;• Technical support — may include advice on particular products or regulatory reporting. May be available in various formats, including website, helpdesk and individual technical advice.• Training — for example competency assessments, training opportunities or product risk guidance. May be online support, regulatory updates or seminar based.• Support on individual issues — for example in dealing with a complaint, a financial promotion or a particular suitability letter.• Financial promotions (all areas of advertisement) - full support which would include websites, brochures, DVDs, email templates, client mail shots, adverts, contacting existing clients and so on.• Remedial work — helping to action remedial work required by the FSA.• And much more … just ask!
  18. 18. CEI Compliance 0800 689 9 689 (UK)Tel (+44) 7092 289901 (Int)We operate across the UK, Europeand the Middle East.Currently exploring opportunities inLatin America