This document discusses differences between risk management in corporations versus financial institutions. While financial institutions led the development of modern risk management practices, their risks focus on financial and market risks and are not directly transferable to corporations. Corporations face a wider variety of risks related to their operations. The nature of risks in corporations requires customized risk management practices rather than directly applying financial institution frameworks. Overall, corporations can benefit from certain financial institution practices but need to adapt them to their own business contexts and risk environments.
11.the impact of operational risk management on the financial development and...Alexander Decker
This document summarizes a research paper that examines the impact of operational risk management on financial development and economic growth among Saudi SME companies. An online survey was distributed to 150 employees from various SMEs in Saudi Arabia. The results showed that operational risk management has positive effects on financial development and growth. Key factors like defining operational risk categories, monitoring controls, and appointing specialist managers can help increase organizational performance. In conclusion, operational risk management appears to benefit the financial performance and development of SMEs in Saudi Arabia.
1) Risk management involves identifying, assessing, and prioritizing risks in order to minimize negative impacts and maximize opportunities. It also includes transferring, avoiding, reducing, or accepting risks.
2) While risk management standards aim to increase confidence, they are sometimes criticized for not measurably improving risk. Risk management must balance high-probability/low-impact risks with low-probability/high-impact risks.
3) Intangible risks like those from deficient knowledge, relationships, or processes directly reduce productivity and must be identified and reduced.
An assessment of risk management of small and medium scale enterprises in nig...Alexander Decker
This document summarizes a research study that assessed risk management among small and medium enterprises (SMEs) in Nigeria. The study examined SME accounting records and insurance policies. It found that SMEs do not maintain proper accounts, making it difficult to identify and manage risks. Additionally, 84% of SMEs did not have insurance to cover business risks outside of their control. The study recommends SMEs maintain proper accounting records to better plan for and manage risks, and purchase insurance to protect against losses from uncontrollable risks.
Risk mitigation strategies in SMEs (small and medium business)Sanjukta Basu
1) Risk management is important for all businesses, especially small and medium enterprises (SMEs), as they face greater risks due to their size and limitations.
2) SMEs are exposed to specific risks like sole proprietorship structures, limited funding options, tough competition from larger players, and high employee turnover.
3) Effective risk management in SMEs includes reducing risks to manageable levels, ensuring regulatory compliance, and customizing tools to assess their risks.
This document discusses deploying risk management in small and medium enterprises (SMEs). It defines risk and outlines the types of risks facing SMEs, including credit, operational, market, liquidity, legal, and compliance risks. It also describes enterprise risk management (ERM), which deals with risks and opportunities affecting value creation. The key components of an ERM framework include risk assessment, risk response, control activities, information and communication, and monitoring. Implementing ERM can help SMEs align strategy with risk appetite, reduce losses, improve overall risk ratings, and facilitate long-term survival.
Enterprise Risk Management as a Core Management Processregio12
The document summarizes the key findings from a study examining best practices in enterprise risk management (ERM) across multiple organizations. The study identified 10 principal findings related to optimizing ERM structures, supporting methodologies, using ERM for decision-making, and evaluating ERM performance. Best practices included establishing executive-level ERM support, using a variety of risk assessment methods, focusing on risk-informed culture and communication, evaluating ERM through performance metrics, and ensuring ERM maturity.
Effect of Enterprise Risk Management on Sustainable Financial Performance of ...AJSERJournal
The paper is aimed at determining the effect of Enterprise Risk Management (ERM) on Sustainable
financial performance of deposit money banks in Nigeria. The specific objectives of the research is to determine the
effect of ERM on earning per share (EPS) and to ascertain the effect of ERM on Tobin Q. Descriptive research design
was adopted for the study considering the total population of all the twenty-one listed deposit money banks in Nigeria.
Data were gathered via secondary source from five (5) public annual reports of the listed deposit money banks for a
period of six years ranged from 2013-2018 and analysed using percentages and ratios. Multiple regressions was
employed in data analysis and testing the hypotheses; in determining if there is a significant effect of Enterprise Risk
Management on Earnings per Share and Tobin Q of listed deposit money banks in Nigeria. The study revealed that
there is a positive and significant relationship between ERM (Firms Size, Leverage) and sustainable financial
performance (TQ & EPS) of listed deposit money banks in Nigeria. Based on the findings, the study recommends that
financial institutions in Nigeria should employ robust Enterprise Risk Management Practices as these are likely to
greatly influence their financial performance in one way or the other and that Central Bank of Nigeria and other
regulators should endeavour to strengthen the enforcement of risk control mechanism to boost a robust bank
performance.
11.the impact of operational risk management on the financial development and...Alexander Decker
This document summarizes a research paper that examines the impact of operational risk management on financial development and economic growth among Saudi SME companies. An online survey was distributed to 150 employees from various SMEs in Saudi Arabia. The results showed that operational risk management has positive effects on financial development and growth. Key factors like defining operational risk categories, monitoring controls, and appointing specialist managers can help increase organizational performance. In conclusion, operational risk management appears to benefit the financial performance and development of SMEs in Saudi Arabia.
1) Risk management involves identifying, assessing, and prioritizing risks in order to minimize negative impacts and maximize opportunities. It also includes transferring, avoiding, reducing, or accepting risks.
2) While risk management standards aim to increase confidence, they are sometimes criticized for not measurably improving risk. Risk management must balance high-probability/low-impact risks with low-probability/high-impact risks.
3) Intangible risks like those from deficient knowledge, relationships, or processes directly reduce productivity and must be identified and reduced.
An assessment of risk management of small and medium scale enterprises in nig...Alexander Decker
This document summarizes a research study that assessed risk management among small and medium enterprises (SMEs) in Nigeria. The study examined SME accounting records and insurance policies. It found that SMEs do not maintain proper accounts, making it difficult to identify and manage risks. Additionally, 84% of SMEs did not have insurance to cover business risks outside of their control. The study recommends SMEs maintain proper accounting records to better plan for and manage risks, and purchase insurance to protect against losses from uncontrollable risks.
Risk mitigation strategies in SMEs (small and medium business)Sanjukta Basu
1) Risk management is important for all businesses, especially small and medium enterprises (SMEs), as they face greater risks due to their size and limitations.
2) SMEs are exposed to specific risks like sole proprietorship structures, limited funding options, tough competition from larger players, and high employee turnover.
3) Effective risk management in SMEs includes reducing risks to manageable levels, ensuring regulatory compliance, and customizing tools to assess their risks.
This document discusses deploying risk management in small and medium enterprises (SMEs). It defines risk and outlines the types of risks facing SMEs, including credit, operational, market, liquidity, legal, and compliance risks. It also describes enterprise risk management (ERM), which deals with risks and opportunities affecting value creation. The key components of an ERM framework include risk assessment, risk response, control activities, information and communication, and monitoring. Implementing ERM can help SMEs align strategy with risk appetite, reduce losses, improve overall risk ratings, and facilitate long-term survival.
Enterprise Risk Management as a Core Management Processregio12
The document summarizes the key findings from a study examining best practices in enterprise risk management (ERM) across multiple organizations. The study identified 10 principal findings related to optimizing ERM structures, supporting methodologies, using ERM for decision-making, and evaluating ERM performance. Best practices included establishing executive-level ERM support, using a variety of risk assessment methods, focusing on risk-informed culture and communication, evaluating ERM through performance metrics, and ensuring ERM maturity.
Effect of Enterprise Risk Management on Sustainable Financial Performance of ...AJSERJournal
The paper is aimed at determining the effect of Enterprise Risk Management (ERM) on Sustainable
financial performance of deposit money banks in Nigeria. The specific objectives of the research is to determine the
effect of ERM on earning per share (EPS) and to ascertain the effect of ERM on Tobin Q. Descriptive research design
was adopted for the study considering the total population of all the twenty-one listed deposit money banks in Nigeria.
Data were gathered via secondary source from five (5) public annual reports of the listed deposit money banks for a
period of six years ranged from 2013-2018 and analysed using percentages and ratios. Multiple regressions was
employed in data analysis and testing the hypotheses; in determining if there is a significant effect of Enterprise Risk
Management on Earnings per Share and Tobin Q of listed deposit money banks in Nigeria. The study revealed that
there is a positive and significant relationship between ERM (Firms Size, Leverage) and sustainable financial
performance (TQ & EPS) of listed deposit money banks in Nigeria. Based on the findings, the study recommends that
financial institutions in Nigeria should employ robust Enterprise Risk Management Practices as these are likely to
greatly influence their financial performance in one way or the other and that Central Bank of Nigeria and other
regulators should endeavour to strengthen the enforcement of risk control mechanism to boost a robust bank
performance.
This document discusses rethinking risk management for new market realities. It provides an overview of how 2011 marked a year of reckoning for risk management as the financial crisis and recession altered the global marketplace and how to think about risk. The document examines the top strategic and regional risks that lie ahead for companies in 2012 based on a global executive survey. It also discusses how leading companies have shifted their risk management focus to be more external, strategic, and top-down oriented in response to this new risk era.
A new emphasis on enterprise risk management from regulators has heightened awareness among bankers to get educated and adopt these best practices at their institution. In response to this increased focus, the RMA ERM Council developed the ERM framework and associated competencies, which became the foundation for a series of highly practical workbooks for implementing effective ERM.
SUPPLY CHAIN FINANCE IN THE CONTEXT OF WORKING CAPITAL MANAGEMENTIgor Zax (Zaks)
Igor Zax, Managing Director of Tenzor Ltd., published a special report, Supply Chain Finance in the Context of Working Capital Management .
The report, published in conjunction with BCR Publishing, covers industry structure, risk management, financing and operational aspects, the way companies viewed the product, as well as trade offs between dynamic discounting and supply chain finance products.
This document is a term paper submitted by Anu Damodaran to her faculty guide, Mr. C.T. Sunil, in partial completion of her MBA program at Amity University in Dubai. The paper is titled "To study ERM - A competitive edge for the company and how it adds value to its shareholders". The introduction provides background on enterprise risk management (ERM) and its importance for businesses facing various strategic, market, operational and financial risks. The paper will review literature on ERM and explore how companies can implement ERM through risk mapping and maturity models. It will also discuss the advantages, suitability and limitations of ERM for businesses.
Risk management practices among commercial banks in ghanaAlexander Decker
This document discusses risk management practices among commercial banks in Ghana. It begins with an abstract that summarizes the study, which compares risk management practices across commercial banks using a regression model. The study found that banks are somewhat efficient in managing risk, and risk monitoring and control is the most influential factor. The document then provides background on the banking system in Ghana and the importance of risk management. It discusses theoretical models and approaches to risk management, highlighting understanding risk, risk identification, risk assessment, analysis, and monitoring. The empirical literature review found that few studies have examined risk management practices in financial institutions specifically.
This document summarizes the results of a survey conducted by the Professional Risk Managers' International Association (PRMIA) on the status of enterprise risk management (ERM) best practices globally. Over 1,000 PRMIA members from 103 countries completed the survey, including risk practitioners, consultants, vendors, and regulators. The survey found that while ERM has evolved significantly since the 1980s, recent financial crises indicate that further improvements are still needed. ERM frameworks like COSO provide definitions and guidelines but implementation varies between organizations depending on factors like industry, size, and regulatory requirements.
How often have you wondered, “what else can go wrong and how are all the risks interconnected?” Developing a risk governance program, a stress testing and scenario analysis program, as well as a risk appetite statement, can help you build an effective, proactive risk management strategy and enhance the risk culture of your institution.
RMA's Risk Appetite Workbook is a practical guide to understanding and developing a risk appetite statement that is appropriate for your bank. Also available are workbooks on Scenario Analysis & Stress Testing for Community Banks, and Governance & Policies.
Paradigm Paralysis in ERM & IA EB7_p48-51 Tim Leech v2Tim Leech
The document discusses the need for a paradigm shift in enterprise risk management (ERM) and internal audit approaches from a risk-centric model to an objective-centric model. It argues the current risk-centric models that rely on risk registers are flawed because they look at risks in isolation rather than linking them to organizational objectives. It proposes boards require management to regularly report on residual risk status linked to key value creation and preservation objectives. This would position management as primarily responsible for risk assessment rather than traditional ERM and internal audit groups. It acknowledges there are significant barriers to change, including guidance materials, skills gaps, and reluctance to change entrenched practices.
The survey found that bribery and corruption remain widespread globally and especially in rapid-growth markets. Respondents showed an increasing willingness to engage in unethical practices like making cash payments or misstating financials to cope with economic pressures. However, many companies are still failing to strengthen controls to prevent such issues. Mixed messages from management dilute tone at the top, and training and enforcement of policies are lacking. Stronger prevention efforts are needed as regulatory scrutiny of corporate activities in high-risk markets intensifies.
Grant Thornton - Risk appetite: A market study UK 2012Grant Thornton
Grant Thornton's inaugural market study on risk appetite. The Risk Appetite study, the first of its kind, canvassed the views of 43 chief executive officers and managing directors from leading London insurers to define current maturity of practice, answering some of the common questions coming out of the market. Our intention is to conduct this study periodically; monitoring overall progress and trends across the market in relation to risk appetite.
Risk Appetite: new challenges to manage an insurance companyPhilippe Foulquier
Based on a survey of European insurance companies, the results call into question some of the risk appetite indicators chosen by insurers. The study shows how risk appetite is applied to all decisions in a fully objective manner and it signals the need for a profound culture change with regard to risk-return analysis. It is on this point, which lies at the heart of the competition among players in the insurance sector – evaluating the performance of allocated capital by activity, measured against the risks incurred – that a number of structural shifts, innovations and changes will have to be made
An Enterprise Risk Management (ERM) programme can help organizations achieve strategic objectives more effectively by taking a systematic approach to identifying, assessing, and addressing risks across the whole organization rather than operating in silos. Key aspects of an effective ERM programme include linking risk strategy to business strategy, establishing clear risk management responsibilities, and using risk information to improve decision-making and investment choices. Regular risk assessment and monitoring can optimize risk management and control activities while supporting organizational learning and competitiveness.
Growth and Financial Performance of MFIs using Survival AnalysisJovi Dacanay
This document discusses growth, financial performance, and survival analysis in the microfinance industry of the Philippines. It begins by introducing microfinance and the risks involved in micro-lending. It then states the objectives of analyzing the life cycle and financial indicators of microfinance firms to understand their financial performance. The document reviews relevant literature on analyzing the stages small firms go through and relating this to their financial structure and needs. It also discusses using survival analysis to model failure rates of financial indicators and score firms' financial performance.
Listening and learning: Stephen Sidebottom, IRM’s first independent non executive chair, on opportunities and threats created by the pandemic.
We have been working behind the scenes for the last few months to refresh the look and feel of Enterprise risk. You have the results in your hand now – either online, mobile or in print. And we hope you like the results. Publishing, like all industries today, is beset with rapid change. As risk managers, you know better than most what such change brings – risk and opportunity. Even in the four years since I have been editing this publication, digital innovations have greatly altered the way we all consume media. The challenge is to take advantage of that diversity while maintaining a core, quality product – the magazine.
Learn more about Risk Management and the essentials with IRM’s level 1 certification.
https://www.theirmindia.org/level1
Level 1 qualified or risk management professionals with 2-3 years of experience can also enroll for level 2 certification.
https://www.theirmindia.org/level2
Visit: https://www.theirmindia.org/
Address: IRM India Affiliate, 907,908,909, Corporate Park II, 9th Floor, VN Puran Marg, Near Swastik Chambers, Chembur Mumbai 400071
This document discusses commercial bank risk management based on interviews with various financial institutions. It finds that banks actively manage three types of risks: (1) risks that can be avoided through business practices, (2) risks that can be transferred to other parties, and (3) risks that must be managed internally. For risks in the third category, banks employ a four part risk management process involving (i) setting standards and reporting requirements, (ii) establishing position limits and rules, (iii) outlining investment guidelines and strategies, and (iv) implementing incentive-based compensation schemes. The document evaluates current industry practices and identifies areas for improvement in commercial bank risk management.
This document discusses the risks associated with derivative transactions and the impact of regulation in limiting these risks. It analyzes price risk, default risk, and systemic risk in derivatives markets. The document argues that default risk has been exaggerated and misunderstood. It claims that systemic risk simply aggregates individual default risks, which are lower than assumed due to the nature of derivatives. The document also discusses "agency risk" arising from compensation structures that can encourage excessive risk taking.
Moderating the Churn: Retaining employees in the quantitative banking spaceJacob Kosoff
This article describes strategies on how to attract, develop and retain data scientists and other individuals with strong quantitative and data skills. Regions Model Risk Management and Validation has benefited from under 10% external turnover for the past five years and the article discusses how we at Regions has reached that success. Written by Jacob Kosoff and Irina Pritchett.
One of our primary goals has been to improve risk management in the financial services sector through enterprise risk management (ERM) education and training. In order to advance this important goal, Global Risk Institute is launching a comprehensive ERM Roadmap program initiative to contribute to this important ERM practice area.
Middle market CFOs are facing significant challenges as their roles have expanded to include risk management responsibilities. They are contending with complex risks from industry, laws, and politics. While traditional risk strategies like commercial insurance offer predictability, they may be draining company profits through exclusions, high premiums, and volatility. Captive insurance is a growing alternative that can provide more comprehensive coverage at a lower cost by reducing self-retention and allowing companies to finance their own losses. Partnering with a captive management company can help CFOs embrace this strategic risk management approach and fortify their organization's risk coverage while improving efficiency and profitability.
This document discusses best practices for enterprise risk management (ERM) from the perspective of a board of directors. It addresses five key dimensions of ERM: risk transparency and insight, risk appetite and strategy, risk-related processes and decisions, risk organization and governance, and risk culture. The document provides recommendations for boards to strengthen their company's risk management, including developing a prioritized risk heat map, understanding the company's "big bets," ensuring risk reports deliver clear and insightful information, defining the company's risk appetite, integrating risk insights into strategy, and focusing on building a strong risk culture. The document concludes by outlining 12 specific actions boards should take to lift their company to the highest standards of risk management.
This document discusses rethinking risk management for new market realities. It provides an overview of how 2011 marked a year of reckoning for risk management as the financial crisis and recession altered the global marketplace and how to think about risk. The document examines the top strategic and regional risks that lie ahead for companies in 2012 based on a global executive survey. It also discusses how leading companies have shifted their risk management focus to be more external, strategic, and top-down oriented in response to this new risk era.
A new emphasis on enterprise risk management from regulators has heightened awareness among bankers to get educated and adopt these best practices at their institution. In response to this increased focus, the RMA ERM Council developed the ERM framework and associated competencies, which became the foundation for a series of highly practical workbooks for implementing effective ERM.
SUPPLY CHAIN FINANCE IN THE CONTEXT OF WORKING CAPITAL MANAGEMENTIgor Zax (Zaks)
Igor Zax, Managing Director of Tenzor Ltd., published a special report, Supply Chain Finance in the Context of Working Capital Management .
The report, published in conjunction with BCR Publishing, covers industry structure, risk management, financing and operational aspects, the way companies viewed the product, as well as trade offs between dynamic discounting and supply chain finance products.
This document is a term paper submitted by Anu Damodaran to her faculty guide, Mr. C.T. Sunil, in partial completion of her MBA program at Amity University in Dubai. The paper is titled "To study ERM - A competitive edge for the company and how it adds value to its shareholders". The introduction provides background on enterprise risk management (ERM) and its importance for businesses facing various strategic, market, operational and financial risks. The paper will review literature on ERM and explore how companies can implement ERM through risk mapping and maturity models. It will also discuss the advantages, suitability and limitations of ERM for businesses.
Risk management practices among commercial banks in ghanaAlexander Decker
This document discusses risk management practices among commercial banks in Ghana. It begins with an abstract that summarizes the study, which compares risk management practices across commercial banks using a regression model. The study found that banks are somewhat efficient in managing risk, and risk monitoring and control is the most influential factor. The document then provides background on the banking system in Ghana and the importance of risk management. It discusses theoretical models and approaches to risk management, highlighting understanding risk, risk identification, risk assessment, analysis, and monitoring. The empirical literature review found that few studies have examined risk management practices in financial institutions specifically.
This document summarizes the results of a survey conducted by the Professional Risk Managers' International Association (PRMIA) on the status of enterprise risk management (ERM) best practices globally. Over 1,000 PRMIA members from 103 countries completed the survey, including risk practitioners, consultants, vendors, and regulators. The survey found that while ERM has evolved significantly since the 1980s, recent financial crises indicate that further improvements are still needed. ERM frameworks like COSO provide definitions and guidelines but implementation varies between organizations depending on factors like industry, size, and regulatory requirements.
How often have you wondered, “what else can go wrong and how are all the risks interconnected?” Developing a risk governance program, a stress testing and scenario analysis program, as well as a risk appetite statement, can help you build an effective, proactive risk management strategy and enhance the risk culture of your institution.
RMA's Risk Appetite Workbook is a practical guide to understanding and developing a risk appetite statement that is appropriate for your bank. Also available are workbooks on Scenario Analysis & Stress Testing for Community Banks, and Governance & Policies.
Paradigm Paralysis in ERM & IA EB7_p48-51 Tim Leech v2Tim Leech
The document discusses the need for a paradigm shift in enterprise risk management (ERM) and internal audit approaches from a risk-centric model to an objective-centric model. It argues the current risk-centric models that rely on risk registers are flawed because they look at risks in isolation rather than linking them to organizational objectives. It proposes boards require management to regularly report on residual risk status linked to key value creation and preservation objectives. This would position management as primarily responsible for risk assessment rather than traditional ERM and internal audit groups. It acknowledges there are significant barriers to change, including guidance materials, skills gaps, and reluctance to change entrenched practices.
The survey found that bribery and corruption remain widespread globally and especially in rapid-growth markets. Respondents showed an increasing willingness to engage in unethical practices like making cash payments or misstating financials to cope with economic pressures. However, many companies are still failing to strengthen controls to prevent such issues. Mixed messages from management dilute tone at the top, and training and enforcement of policies are lacking. Stronger prevention efforts are needed as regulatory scrutiny of corporate activities in high-risk markets intensifies.
Grant Thornton - Risk appetite: A market study UK 2012Grant Thornton
Grant Thornton's inaugural market study on risk appetite. The Risk Appetite study, the first of its kind, canvassed the views of 43 chief executive officers and managing directors from leading London insurers to define current maturity of practice, answering some of the common questions coming out of the market. Our intention is to conduct this study periodically; monitoring overall progress and trends across the market in relation to risk appetite.
Risk Appetite: new challenges to manage an insurance companyPhilippe Foulquier
Based on a survey of European insurance companies, the results call into question some of the risk appetite indicators chosen by insurers. The study shows how risk appetite is applied to all decisions in a fully objective manner and it signals the need for a profound culture change with regard to risk-return analysis. It is on this point, which lies at the heart of the competition among players in the insurance sector – evaluating the performance of allocated capital by activity, measured against the risks incurred – that a number of structural shifts, innovations and changes will have to be made
An Enterprise Risk Management (ERM) programme can help organizations achieve strategic objectives more effectively by taking a systematic approach to identifying, assessing, and addressing risks across the whole organization rather than operating in silos. Key aspects of an effective ERM programme include linking risk strategy to business strategy, establishing clear risk management responsibilities, and using risk information to improve decision-making and investment choices. Regular risk assessment and monitoring can optimize risk management and control activities while supporting organizational learning and competitiveness.
Growth and Financial Performance of MFIs using Survival AnalysisJovi Dacanay
This document discusses growth, financial performance, and survival analysis in the microfinance industry of the Philippines. It begins by introducing microfinance and the risks involved in micro-lending. It then states the objectives of analyzing the life cycle and financial indicators of microfinance firms to understand their financial performance. The document reviews relevant literature on analyzing the stages small firms go through and relating this to their financial structure and needs. It also discusses using survival analysis to model failure rates of financial indicators and score firms' financial performance.
Listening and learning: Stephen Sidebottom, IRM’s first independent non executive chair, on opportunities and threats created by the pandemic.
We have been working behind the scenes for the last few months to refresh the look and feel of Enterprise risk. You have the results in your hand now – either online, mobile or in print. And we hope you like the results. Publishing, like all industries today, is beset with rapid change. As risk managers, you know better than most what such change brings – risk and opportunity. Even in the four years since I have been editing this publication, digital innovations have greatly altered the way we all consume media. The challenge is to take advantage of that diversity while maintaining a core, quality product – the magazine.
Learn more about Risk Management and the essentials with IRM’s level 1 certification.
https://www.theirmindia.org/level1
Level 1 qualified or risk management professionals with 2-3 years of experience can also enroll for level 2 certification.
https://www.theirmindia.org/level2
Visit: https://www.theirmindia.org/
Address: IRM India Affiliate, 907,908,909, Corporate Park II, 9th Floor, VN Puran Marg, Near Swastik Chambers, Chembur Mumbai 400071
This document discusses commercial bank risk management based on interviews with various financial institutions. It finds that banks actively manage three types of risks: (1) risks that can be avoided through business practices, (2) risks that can be transferred to other parties, and (3) risks that must be managed internally. For risks in the third category, banks employ a four part risk management process involving (i) setting standards and reporting requirements, (ii) establishing position limits and rules, (iii) outlining investment guidelines and strategies, and (iv) implementing incentive-based compensation schemes. The document evaluates current industry practices and identifies areas for improvement in commercial bank risk management.
This document discusses the risks associated with derivative transactions and the impact of regulation in limiting these risks. It analyzes price risk, default risk, and systemic risk in derivatives markets. The document argues that default risk has been exaggerated and misunderstood. It claims that systemic risk simply aggregates individual default risks, which are lower than assumed due to the nature of derivatives. The document also discusses "agency risk" arising from compensation structures that can encourage excessive risk taking.
Moderating the Churn: Retaining employees in the quantitative banking spaceJacob Kosoff
This article describes strategies on how to attract, develop and retain data scientists and other individuals with strong quantitative and data skills. Regions Model Risk Management and Validation has benefited from under 10% external turnover for the past five years and the article discusses how we at Regions has reached that success. Written by Jacob Kosoff and Irina Pritchett.
One of our primary goals has been to improve risk management in the financial services sector through enterprise risk management (ERM) education and training. In order to advance this important goal, Global Risk Institute is launching a comprehensive ERM Roadmap program initiative to contribute to this important ERM practice area.
Middle market CFOs are facing significant challenges as their roles have expanded to include risk management responsibilities. They are contending with complex risks from industry, laws, and politics. While traditional risk strategies like commercial insurance offer predictability, they may be draining company profits through exclusions, high premiums, and volatility. Captive insurance is a growing alternative that can provide more comprehensive coverage at a lower cost by reducing self-retention and allowing companies to finance their own losses. Partnering with a captive management company can help CFOs embrace this strategic risk management approach and fortify their organization's risk coverage while improving efficiency and profitability.
This document discusses best practices for enterprise risk management (ERM) from the perspective of a board of directors. It addresses five key dimensions of ERM: risk transparency and insight, risk appetite and strategy, risk-related processes and decisions, risk organization and governance, and risk culture. The document provides recommendations for boards to strengthen their company's risk management, including developing a prioritized risk heat map, understanding the company's "big bets," ensuring risk reports deliver clear and insightful information, defining the company's risk appetite, integrating risk insights into strategy, and focusing on building a strong risk culture. The document concludes by outlining 12 specific actions boards should take to lift their company to the highest standards of risk management.
Nuestro informe Global Risk Landscape 2016 revela que el 87% de los líderes empresariales consideran que
el mundo se ha convertido en un lugar con mayor riesgo. Para la realización de este estudio, que se inició a
comienzos de 2016, BDO ha consultado a 500 altos directivos de las principales empresas de 44 países de
Europa, Oriente Medio, África, Asia y América acerca de lo que consideran que son los mayores riesgos a los que
enfrentan sus empresas en la actualidad y en el futuro.
Para más de la mitad (56 %) de los líderes empresariales encuestados, la mayor amenaza es el aumento
de la competencia, seguida por la desaceleración económica (43%) y la interrupción del negocio (42 %).
La mitigación del riesgo se ha convertido en una cuestión primordial para la mayor parte de las empresas
consultadas, mientras que la creación de valor es visto como el mayor desafío global del futuro.
In all of its forms, risk management is rapidly growing in importance within the commodity asset class. It will only become even more critical and complex in the future. Driven by unprecedented levels of change in the industry ranging from geopolitics to carbon, effective risk management is shifting for many commodity firms from just another activity to be managed to a critical component of business strategy that helps drive and inform brand, gain financing and trust, and demonstrates proper controls.
Since the onset of the global financial crisis in 2008, businesses around the world have faced a barrage of new risk-related challenges.
The macroeconomic environment of recent years, marked by the global financial crisis, fiscal uncertainty in the US and sovereign debt problems in Europe, has also helped to make companies more riskaverse, leading them to swap bold investment decisions for more cautious behaviour and cash hoarding. The tide is turning, however, with most expecting 2014 to mark a return to growth...
This document discusses the growing use of economic capital models and risk-adjusted return on capital (RAROC) in performance management at banks following the 2008 financial crisis. It finds that while most banks now have economic capital models, they are primarily used to evaluate business units rather than individual transactions. There is still room for improvement in using these models to optimally allocate constrained capital resources. The document also examines issues like the granularity of capital allocation, setting RAROC targets and hurdle rates, and linking economic capital to performance management and pricing decisions. Overall, the use of economic capital modeling is gaining acceptance but banks have yet to fully leverage these tools in capital allocation and day-to-day business decisions.
The document provides an overview of the current economic and regulatory environment for financial institutions. It notes that while the US and UK economies grew in 2014, the Eurozone, Japan, and some emerging markets like China saw weaker growth. Regulatory reforms continue to sweep the industry globally, with requirements becoming more stringent in areas like capital adequacy, liquidity, risk management, and conduct. Complying with multiple and sometimes conflicting regulations across jurisdictions poses ongoing challenges for large financial institutions.
Role of Actuaries in Enterprise Risk Management Sonjai_Rajiv(17 GCA) Final CopySonjai Kumar, SIRM
Actuaries have traditionally been involved in risk identification and measurement in insurance, particularly for mortality, lapse, expense, and interest rate risk. However, the role of actuaries is expanding to enterprise risk management (ERM) in insurance and other financial sectors like banking. Actuaries' quantitative skills make them well-suited for ERM tasks like calculating economic capital, value at risk, and stress testing across various risk types. The Solvency II regulations also provide opportunities for actuaries to be involved in all three pillars of the solvency framework. For actuaries to take on broader ERM roles, they need to enhance their skills in areas like credit, liquidity, and operational risk management.
Michel Rochette is a professional risk manager who helps organizations implement enterprise risk management (ERM) frameworks. He has over 20 years of experience in risk management. His goal is to ethically advise firms on best risk practices rather than sell ERM solutions. In addition to his advisory work, Michel is recognized as a thought leader in the ERM field through his presentations, articles, training and intellectual contributions.
This document provides an introduction to enterprise risk management (ERM). It discusses how ERM aims to protect and increase value for an organization by taking an integrated approach to managing risks across the entire enterprise. ERM calls for high-level oversight of all risks on a portfolio basis. The document provides background on the evolution of risk management and outlines some of the key risks organizations face today from globalization and other factors. It also notes that chief risk officers and risk committees are important for overseeing ERM.
The document discusses two quantitative models - the Household Risk Assessment Model (HRAM) and the Macro Financial Risk Assessment Framework (MFRAF) - that the Bank of Canada has developed to better identify and measure systemic financial risks, with HRAM focusing on risks from elevated household debt and MFRAF analyzing contagion effects between banks. It also notes the challenges in modeling systemic risk and the need to continue improving these quantitative tools.
The Risk Management Initiative in Microfinance (RIM) aims to develop awareness, best practices, and standards for risk management in microfinance through their Risk Management Graduation Model (RMGM). The RMGM provides a starting point for stakeholders interested in improving risk management and changes the focus from "how to do risk management" to "why it is important". The RMGM has been pilot tested by 15 microfinance institutions in 14 countries. The RIM seeks to inventory existing risk management tools, harmonize risk processes, propose scalable frameworks, and provide additional resources to the sector. An important goal is changing the question around risk management from how to implement it, to why it is important for organizations and clients.
predictive-analytics-the-silver-bullet-in-efficient-risk-management-for-banksArup Das
This document discusses how predictive analytics can help banks improve risk management. It begins by outlining the major risks banks face and the regulatory requirements around risk management. It then discusses how predictive analytics can enhance various aspects of enterprise risk management, including improving credit decisioning, enhancing credit quality, and enabling a 360-degree view of customers. The document provides examples of how social network analysis and big data can generate insights to better identify fraud and risk. Overall, the document argues that predictive analytics, when embedded into risk management frameworks, can help banks more efficiently identify and respond to risks.
Risk Monitoring and Management Trends In CommoditiesCTRM Center
The document summarizes the results of a survey conducted by Commodity Technology Advisory LLC on risk management trends in the commodities industry. The survey found that market risk, credit risk, and regulatory risk were seen as the most important risks facing companies. While some risks are managed at the department level, there is an increasing focus on managing risks at the enterprise level. However, the survey found that companies use a mix of systems and tools to manage risks, including spreadsheets, and that risk management capabilities in existing commodity trading and risk management (CTRM) systems are not being fully utilized.
Managing Risk in Perilous Times- Practical Steps to Accelerate RecoveryFindWhitePapers
The document discusses lessons that can be learned from the financial crisis regarding effective risk management. It argues that risk management needs greater authority, senior executive leadership, and sufficient risk expertise at high levels. It also stresses the importance of combining quantitative risk model outputs with human judgment, paying attention to the quality of data used in models, and using stress testing and scenario planning to prepare for potential risks and events.
The document discusses the role of chartered accountants in enterprise risk management. It begins with defining risk and the types of risks faced by organizations. It then explains what enterprise risk management is, its importance and benefits. It outlines the statutory requirements for ERM in India per the Companies Act and SEBI regulations. Finally, it details the various ways chartered accountants can facilitate the ERM process, such as conducting process audits, developing ERM frameworks, and assisting with implementation.
The document discusses the evolution of risk management in corporate business management. It outlines three main implications of the current competitive environment: 1) companies' top lines are becoming more volatile; 2) the range of risks companies face is wider; and 3) firms and funders evaluate each other based on risk analysis abilities. As a result, risk assessment now includes new risks, higher senior management involvement, and inclusion in business plans. Risk management requires widespread company attention and risk managers should collaborate with operational departments to identify and mitigate risks. The goal is for risk managers to become essential partners that help measure and communicate risks to support business decision making.
One of the biggest drawbacks in the subprime crisis was a wrong fit of risk measurements and tools to the firm’s portfolio allocation strategies.1 Crouhy (2009) and Stulz (2009) among others point out what went wrong in the risk management practices during the current and other recent financial crisis:
(a) Inadequate use of risk metrics. Daily VaR (Value at Risk) is widely used in financial institutions to assess the trading activities risk. However, VaR measures the minimum worst loss expected (at 99% or 95% confidence level, depending on the distribution used) and not the expected worst loss (Stulz, 2009). Furthermore, VaR does not tell us anything about distribution of the losses BEYOND the minimum worst loss and even worse, it is not sure whether VaR can capture low probability catastrophic events.
Thoughts on Direction of Ops Risk Management -V4 0Amrut Joshi
The document discusses risk management and operational risk. It provides context on the tumultuous global economic environment of the last decade which brought focus to risk management. However, some question if current risk management practices are adequate given failures still occurred. The document then discusses various studies on risk management and findings that risks are about human decisions. Therefore, influencing business decisions is important to manage risks and avoid failures. It introduces the concept of "behavioural risk management" and capturing the experience of being embedded within business to influence decisions from the first line of defence.
The Chief Risk Officer (CRO) role has evolved from initially focusing on risk control to taking a broader enterprise risk management approach. To be effective, the CRO must balance the roles of police officer, teacher, counselor, and business leader. There is no single model for how the CRO should be structured in an organization, but typically they report either to the CEO or CFO. Appointing an effective CRO is important for companies to make better risk and investment decisions.
Similar to 40 whats different in the corporate world (20)
The report *State of D2C in India: A Logistics Update* talks about the evolving dynamics of the d2C landscape with a particular focus on how brands navigate the complexities of logistics. Third Party Logistics enablers emerge indispensable partners in facilitating the growth journey of D2C brands, offering cost-effective solutions tailored to their specific needs. As D2C brands continue to expand, they encounter heightened operational complexities with logistics standing out as a significant challenge. Logistics not only represents a substantial cost component for the brands but also directly influences the customer experience. Establishing efficient logistics operations while keeping costs low is therefore a crucial objective for brands. The report highlights how 3PLs are meeting the rising demands of D2C brands, supporting their expansion both online and offline, and paving the way for sustainable, scalable growth in this fast-paced market.
𝐔𝐧𝐯𝐞𝐢𝐥 𝐭𝐡𝐞 𝐅𝐮𝐭𝐮𝐫𝐞 𝐨𝐟 𝐄𝐧𝐞𝐫𝐠𝐲 𝐄𝐟𝐟𝐢𝐜𝐢𝐞𝐧𝐜𝐲 𝐰𝐢𝐭𝐡 𝐍𝐄𝐖𝐍𝐓𝐈𝐃𝐄’𝐬 𝐋𝐚𝐭𝐞𝐬𝐭 𝐎𝐟𝐟𝐞𝐫𝐢𝐧𝐠𝐬
Explore the details in our newly released product manual, which showcases NEWNTIDE's advanced heat pump technologies. Delve into our energy-efficient and eco-friendly solutions tailored for diverse global markets.
Enhancing Adoption of AI in Agri-food: IntroductionCor Verdouw
Introduction to the Panel on: Pathways and Challenges: AI-Driven Technology in Agri-Food, AI4Food, University of Guelph
“Enhancing Adoption of AI in Agri-food: a Path Forward”, 18 June 2024
Presentation by Herman Kienhuis (Curiosity VC) on Investing in AI for ABS Alu...Herman Kienhuis
Presentation by Herman Kienhuis (Curiosity VC) on developments in AI, the venture capital investment landscape and Curiosity VC's approach to investing, at the alumni event of Amsterdam Business School (University of Amsterdam) on June 13, 2024 in Amsterdam.
SATTA MATKA DPBOSS KALYAN MATKA RESULTS KALYAN CHART KALYAN MATKA MATKA RESULT KALYAN MATKA TIPS SATTA MATKA MATKA COM MATKA PANA JODI TODAY BATTA SATKA MATKA PATTI JODI NUMBER MATKA RESULTS MATKA CHART MATKA JODI SATTA COM INDIA SATTA MATKA MATKA TIPS MATKA WAPKA ALL MATKA RESULT LIVE ONLINE MATKA RESULT KALYAN MATKA RESULT DPBOSS MATKA 143 MAIN MATKA KALYAN MATKA RESULTS KALYAN CHART
Satta matka fixx jodi panna all market dpboss matka guessing fixx panna jodi kalyan and all market game liss cover now 420 matka office mumbai maharashtra india fixx jodi panna
Call me 9040963354
WhatsApp 9040963354
High-Quality IPTV Monthly Subscription for $15advik4387
Experience high-quality entertainment with our IPTV monthly subscription for just $15. Access a vast array of live TV channels, movies, and on-demand shows with crystal-clear streaming. Our reliable service ensures smooth, uninterrupted viewing at an unbeatable price. Perfect for those seeking premium content without breaking the bank. Start streaming today!
https://rb.gy/f409dk
Ellen Burstyn: From Detroit Dreamer to Hollywood Legend | CIO Women MagazineCIOWomenMagazine
In this article, we will dive into the extraordinary life of Ellen Burstyn, where the curtains rise on a story that's far more attractive than any script.
Best Competitive Marble Pricing in Dubai - ☎ 9928909666Stone Art Hub
Stone Art Hub offers the best competitive Marble Pricing in Dubai, ensuring affordability without compromising quality. With a wide range of exquisite marble options to choose from, you can enhance your spaces with elegance and sophistication. For inquiries or orders, contact us at ☎ 9928909666. Experience luxury at unbeatable prices.
SATTA MATKA DPBOSS KALYAN MATKA RESULTS KALYAN CHART KALYAN MATKA MATKA RESULT KALYAN MATKA TIPS SATTA MATKA MATKA COM MATKA PANA JODI TODAY BATTA SATKA MATKA PATTI JODI NUMBER MATKA RESULTS MATKA CHART MATKA JODI SATTA COM INDIA SATTA MATKA MATKA TIPS MATKA WAPKA ALL MATKA RESULT LIVE ONLINE MATKA RESULT KALYAN MATKA RESULT DPBOSS MATKA 143 MAIN MATKA KALYAN MATKA RESULTS KALYAN CHART INDIA MATKA KALYAN SATTA MATKA 420 INDIAN MATKA SATTA KING MATKA FIX JODI FIX FIX FIX SATTA NAMBAR MATKA INDIA SATTA BATTA
❼❷⓿❺❻❷❽❷❼❽ Dpboss Matka Result Satta Matka Guessing Satta Fix jodi Kalyan Final ank Satta Matka Dpbos Final ank Satta Matta Matka 143 Kalyan Matka Guessing Final Matka Final ank Today Matka 420 Satta Batta Satta 143 Kalyan Chart Main Bazar Chart vip Matka Guessing Dpboss 143 Guessing Kalyan night
The Most Inspiring Entrepreneurs to Follow in 2024.pdfthesiliconleaders
In a world where the potential of youth innovation remains vastly untouched, there emerges a guiding light in the form of Norm Goldstein, the Founder and CEO of EduNetwork Partners. His dedication to this cause has earned him recognition as a Congressional Leadership Award recipient.
2. Contents
McKinsey Working Papers on Risk presents McKinsey’s best current thinking on risk and risk management. The
papers represent a broad range of views, both sector-specific and cross-cutting, and are intended to encourage
discussion internally and externally. Working papers may be republished through other internal or external channels.
Please address correspondence to the managing editor, Rob McNish (rob_mcnish@mckinsey.com).
Enterprise risk management: What’s different in the corporate world and why
Introduction1
Reframing a basic misconception 1
The nature of risks in corporates versus financial institutions 3
Implications for risk-management practices 4
Overall consequences 8
Areas of greatest—and least—opportunity for sharing 10
Conclusion11
3. Enterpriseriskmanagement:What’s
differentinthecorporateworldandwhy
Introduction
Given the current environment of continuing economic uncertainty, plus a steady stream of unfortunate major
operational-risk events striking companies around the globe, few would dispute that some attention to risk
management at the enterprise level is important. Nor would many dispute that typical current practices too often fail
to deliver. For companies outside the financial sector, however, it is challenging to find inspiration.
Historically, a significant part of risk-management practice at corporates has evolved from health and safety risk
management in heavy industrial and natural-resources companies. It focuses on detailed cataloguing, tracking, and
mitigation of a long list of what might go wrong—expanded beyond health and safety. This list is typically called the
“risk register.” Yet companies that use this as their core framework for enterprise-level risk management routinely
miss or woefully misestimate the risks that end up really mattering to the achievement of their overall objectives or
even fundamental health.
On the other hand, given its role as an intermediator and disaggregator of risk, the financial sector has led the charge
in developing risk-management practices related to financial and market risks. Of course, waves of recent systemic
failure in the financial sector promote a healthy sense of skepticism about the idea of using the practices developed
in that industry as a blueprint for others. In addition, current innovation in the financial sector is largely focused on
responding to changes in governmental regulation and other firefighting measures. Nevertheless, as far as these
“liquid” risks are concerned, the financial sector continues to provide a rich seam of frameworks and methodologies
from which all sectors can potentially mine.
But where to go for broader inspiration? The overall risk-management framework, the nature of management (and
board) dialogue about risk, or the integration of “risk thinking” into navigating overall business uncertainty? The
reality is that while the need for thoughtful enterprise risk management (ERM) is clear, corporate decision makers,
from line managers to board members, are jaded. The risk-management process is usually perceived as unclearly
scoped, bureaucratic, ineffective, and even obstructionist. Participation in an enterprise-level process is viewed with
about as much enthusiasm as going to the dentist—with the additional suspicion that the risk-management tooth-
puller may in fact be a quack.
Perhaps that partly explains why many corporates are looking to the financial sector for the broader inspiration
they seek—after all, the approaches and techniques are familiar and available and there is plenty of talent for hire.
“We hired a risk manager from a US bank, but he’s still getting to know our business,” reports the CFO of an Asian
conglomerate. “Our overall risk transformation is being driven by two new board members, one from a European
financial institution, with deeper technical knowledge than the rest of us,” recounts another board member of a US
consumer-goods company.
The enthusiasm in those statements is at best lukewarm. Comments from deeper in the organization are often
scathing: “Now that there is an ex-banker on the board, we’re somehow supposed to create regular financial-risk
reports allocating risk capital to risk types and business units. It makes no sense for us,” complains the treasurer of
an industrial-manufacturing company.
Our belief is that thoughtful importing by corporates of talent and good practices from the financial sector can indeed
be highly beneficial. But all those involved need to be continually conscious of the differences in expectations,
challenges, and even the language used to frame the role of the risk-management function, in order for the cross-
industry transfer of ERM approaches to work.
Reframingabasicmisconception
Financial institutions, whose entire business model relies on the aggregation and disaggregation of risk, have been
the cradle of modern risk management as a set of disciplines and processes developed since the late 1980s.
4. 2
However, that does not mean there is a linear evolutionary path whereby financial institutions define the leading edge
and others’ risk-management practices obediently follow over some uncertain timeframe. Looking at all business
sectors, it is useful to reframe the journey and to differentiate among four stages of maturity (Exhibit 1).
While some financial institutions (for instance, many smaller regional banks) find themselves in stage 1, and a handful
of investment banks would consider themselves at stage 3, the average financial institution sits squarely in stage 2 of
this spectrum. (Of course, regardless of stage, the topic of changing financial-sector regulation and its implications
is very much top of mind.) Other industry sectors have different centers of gravity. The retail sector and telecoms,
for example, on average are on the cusp of passing from stage 0 to stage 1. Companies in sectors with strong
natural-resources exposure (whether as resource extractors or processors) or important technical or RD risks (for
example, pharma) are more often on the cusp of stage 1 to stage 2, or wholly in stage 2. Typical companies moving
into stage 3 are energy companies using increasingly mature liquid commodity markets, or conglomerates or asset
managers/investors juggling a diverse portfolio of assets, in each case seeking a source of advantage in a crowded,
competitive arena.
Even within sectors there is a strong lack of homogeneity. For example, in one major market, a leading telco is
developing quite sophisticated stress-testing macroscenario for its profit and loss and strategic plan, and models
the value at risk (VAR) from its currency exposures (stage 2). By contrast, one of its peers, with a roughly comparable
market position and performance, has formalized risk-management approaches that consist of the bare minimum
required to meet regulatory requirements (stage 0). Similarly, there are mining companies with advanced cash-flow-
at-risk models and optimized project financing and commodity hedging for new mines (stage 3) competing with
others that merely conduct an annual review of mitigation plans for their top-30 operational risks (stage 1).
There is, so far, an absence of robust statistical evidence that “more mature risk management,” however defined,
would necessarily translate into better performance. However, in our opinion, these differences in maturity are neither
accidental, nor irrelevant. Rather, they reflect underlying differences in drivers of value creation, including assets and
exposures,andmanagementculture.Companiesfindnichesnotonlyintermsofmarketopportunityandvalue-chain
position,butalsoinstrategiccapabilities;riskmanagementcanbeoneofthese.
Justasoverthepast40yearstherehasbeenapowerfulshifttowardmorecarefulstrategicmanagementofthefirm,
webelievethattherewillcontinuetobeapowerfuloverallshifttotherightonthisrisk-managementmaturityspectrum.
Butitwillbeagradualprocess,withdrifthappeningatdifferentspeeds.Dependingonone’scircumstance,movingto
Drivers
Key tools
▪ Compliance with basic
standards/regulations
▪ Reduction of regular
surprises
▪ ROE1
improvement
requirements
▪ Competitive pressure
▪ Navigating trade-offs
▪ Top management focus
on risk-adjusted
performance
▪ Finding niche in mature
marketplace
▪ Opportunistic
approaches
▪ At-risk measures
(eg, VAR,2
CFAR3
)
▪ Systematic scenario
analysis of profit and
loss
As left, plus:
▪ Strong risk culture
▪ Unbundling risks
through contracting and
markets
▪ Avoiding unexpected
large loss events
▪ Stability to enable
growth plan
▪ Professionalized
management
▪ Risk heat map based
on consensus
assessments
Exhibit 1 There are four stages of maturity in risk management.
Initial transparency
stage
0
Systematic risk
reduction
1
Risk-return
management
2
Risk as competitive
advantage
3
1 Return on equity.
2 Value at risk.
3 Cash flow at risk.
5. Enterprise risk management: What’s different in the corporate world and why 3
therightinriskmanagementattherighttimewillbeastrategicinvestmentfordifferentiationversuspeers,oracatch-
upmoveifonehasfallenbehind.Inparticular,individualcorporatesneedtofindtheirownpathbasedontheirspecific
opportunitiesforvalue-creatingcompetitivedifferentiation,andnotjustseekto“learnfromtheone’sbetters.”
Inviewofthislandscape,withavarietyoflevelsofmaturityandphilosophy,thereissometimesalsothemisconception
thattherearenotransferrablegoodpractices—thatthedifferencesamongandbetweencompaniesaresogreatthat
everycompanyneedstoimproviseinitsownway.Weshallseebelowthatwhilecustomizationisimportant,thereare
emerginggoodpracticesthatcanbeapplied, mutatismutandis.
Thenatureofrisksincorporatesversusfinancialinstitutions
Thetypicalfirstsurpriseexperiencedbythefinancial-institutionriskpractitionerarrivingatacorporateistheabsence
ofastandardizedrisktaxonomy.Inabank,atahighlevel,thereisaclearandubiquitousseparationintomarket,credit,
operational,andliquidityrisks.Thereare,ofcourse,complications,suchashowchangesinthemacroeconomicand
regulatoryenvironmentstranslateintothesefourcategories,andhowtheyarecorrelated.Butitisclearthatatop-level
standardtaxonomyworkswellforinstitutionswithverysimilarhigh-levelbusinessmodels.
Corporatesthathavethoughtsystematicallyabouttheirriskshaveusuallydevelopedanonstandardizedtaxonomyof
theirown.Theobviousreasonforthedifferenceisthatthetakingoffinancial-marketpositionsandextendingofcreditis
nearlyalwaysalesscentralpartoftheirbusinessmodel.Otherrisks—suchastechnical,supplychain,physicalsafety
andenvironmental,natural-resourcesavailabilityandcost,butgroupedinwhateverwayreflectsthemanagement
systemofthecompany—aremorecharacteristic.
Averyhigh-leveldivisionamongoperational,strategic,andfinancialrisksisusuallyhelpful.However,aspecificriskmay
beallocatedtodifferentcategoriesbasedonhowexactlyitaffectsaparticularcompany.Forinstance,developmental
delaysinnewtechnologiesmaybeoperationalrisksforacompanythatneedstoreconfigureitssupplychainforanew
projectasaresult,butmaybecrucialstrategicrisks(upsideordownside)forsomeoneinthatsupplychain.Commodity
pricesareafinancialriskforacommodityprocessorthatmaysufferatemporarymismatchbetweenitsinventorycosts
andcontractedsellingprice,butareastrategicriskforareal-estatedeveloperwithholdingsinAustralia,Canada,and
theMiddleEast,whoseeconomiesarehighlydependentonnaturalresourcesoverall.Asaresult,nonstandardrisk
taxonomiesactuallyworkbetter,sincetheyreflecttherealdifferencesinthemechanismthroughwhichtheserisks
affectdifferentcompanies,andthereforehowthecompaniesneedtomonitorandrespondtotheserisks.
Lessobviously,therearecrucialdifferencesinthenatureofriskexposures.Fundamentally,thetypicalbankis
leveraged,buthastheabilityto“dialupordown”itslevelofexposuretomarketorcreditrisks,andindeedtosample
differentflavorsofeachoftheserisks,bydialingupordownitsappetitefortransactionsspecificallyexposedtothese
risks.Thisiswhymanybankshavenaturallysettledatstage2oftherisk-maturityframework:itprovidesexactlythe
rightlevelofquantificationtoallowthenavigationofsuchdecisions.
Incontrast,importantrisksfacedbycorporatesare“chunky.”Youeitherenteracertainbusinessarenaatscale,or
youdon’t.Tobesure,therearecertainopportunitiesforscalingyourexposure,andsharingormitigatingrisks,but
fundamentallythetypicalcorporateframesitscorerisk-managementquestionsbyasking“whicharemymainrisks?”
and “what risks am I willing to take on?” rather than deciding to “measure my exposure to a standard set of risks and
I’ll choose where to set the dial on each one.”
Thedifferencesbecomemorestrikingasoneexploresthenonlinearityofexposures.Financialinstitutions’nonlinear
exposuresarisefromslicingfinancialrisksintotranches,byqualityortimetomaturity,forexample,sothatindividual
assetholders’orcounterparties’exposuresaremagnified(orconstrained)within(oroutside)acertainrange.In
contrast,whilemanycorporates’risksareeitherdiscreteorlinear,partofthereasonsomecompanieshavemovedto
therightonthematurityspectrumispreciselybecauseofthenonlinearityofcertaincrucialstrategicrisksthattheyface.
Andmuchofthisnonlinearityisdrivenbythenatureofthecompany’sresponsetotherisk.
7. Enterprise risk management: What’s different in the corporate world and why 5
financial institutions are highly relevant. But where risks have poor data and exposure depends on untested and
unpredictable endogenous responses by the company’s own management to the risk stimulus, such models are
excessive and can actually be misleading as a basis for decision making.
In particular, the financial-risk practitioner can help a corporate become more systematic at aggregating the
common risk exposures across different business units, much in the style of the banks. On the other hand, the
corporate-risk practitioner will need to work much harder than his or her financial peer in helping the company’s
top management develop a shared sense of the top dozen or so “mega-risks” that really drive corporate health and
performance—and how to address them. This is the more complicated and situation-specific analog of the standard
banking-risk taxonomy.
Risk appetite and strategy. The typical bank is highly leveraged, with risk capital a very scarce resource for which
there is vigorous internal competition. In view of the standard risk taxonomy, setting risk appetite is an exercise in
allocating this risk capital effectively, and defining the right risk limits to ensure overall risk taking is within appropriate
bounds. Discussions about which risks to take are important at specific decision points, but tend to be focused on
whether the institution understands the risks sufficiently, and whether the quantification of the risk capital needed
is reasonably accurate, for example, by asking, “Do we dare commit to these products given what might happen in
event of a correlation breakdown?”
Thesituationincorporatesdiffersintwoways.First,corporatescanhaveveryfruitfuldiscussionsaboutexactlywhich
riskstheyarepreferentiallypositionedtoownorwanttolearntomanagebetter,forexample,bydeciding“Wehave
expertiseinmanagingcomplexRDportfoliosthatwecandeployhere,”“Ourmixofshort-termversuslong-term
contractsversuscompetitorXgivesusmoreflexibilitytorespond,”or“Thisisagoodlimited-downsideopportunity
tolearntomanageasubsidiaryinadevelopingcountrythatwecanthenbuildonformoreambitiousinternational
growth.”Andthelimitationsofriskquantification(togetherwithgenerallybeinglessleveragedandlessregulated)mean
risklimitsaretypicallyreplacedbymorequalitativeriskpolicies.Forinstance,asamatterofpolicy,somecorporates
insistthatanyopenforeign-exchangepositionsareimmediatelyhedgedoncecreatedorthatanyprojecttheybid
toprovidemusthaveaclauselimitingliability.Ortheyeveninsisttheywillnotselltheirproducttocertaincustomers
orthroughcertainchannelsduetopotentialliabilityorreputationalriskissues.Theseareallexampleswheresuch
companiesdonotcalculatealimitingamountofriskcapitalthatisallowableagainstsucharisk,sincetheydon’ttrust
itsquantification.Inaddition,theactivityorinvestmentinquestionissufficientlynon-corethatitisnotworththetrouble
totry,evenifthereistheoddbitofvalueleakage(forexample,theunnecessarycostofhedgingandmissingabusiness
opportunitythatcouldhavebeenpursuedatsufficientexpectedprofittocovertherisk).
Second, the question of overall risk appetite is much broader in corporates. Given the macroeconomic and regulatory
environment, the reality for many financial institutions is that the level of flexibility in overall risk appetite is fairly low. A
typical corporate, however, manages for a whole range of financial metrics, such as earnings and cash over multiple
time periods. Different stakeholders—including crucially important ratings agencies—have different expectations. All
of these translate into constraints on risk appetite that many corporates are only beginning to explore systematically.
In addition, corporate-financial levers such as raising debt or adjusting equity capital, and strategic levers such as
joint ventures on a major project or hedging strategies, all affect, and are affected by, risk appetite. The implication is
that the effective risk-appetite allocator at a financial institution is a technical (and regulatory) specialist, while the risk-
appetite expert at a corporate needs to become a strategic financial thinker who brokers dialogue between the board
and top management.
Risk-related decisions and processes. There are, though, crucial differences between corporates and
financial institutions. The business model of a bank is to act as an intermediary (disaggregator and consolidator) of
risk. Accordingly, on a fundamental level, risk is part of all bank decisions (for example, to whom to offer credit via
lending or trading decisions). As a consequence, the role of risk “management” in business decisions and processes
has mutated into asking, “What else is necessary beyond what business managers are already doing?” Typical
8. 6
elements are processes related to proper risk assessment (including back office and infrastructure), compliance and
escalation, and—in view of the changing landscape—regulatory and stakeholder management.
In contrast to their financial-sector counterparts, frontline managers in corporates are, in general, less comfortable
and confident as risk takers, and their risk-taking actions more directly influence others. For instance, the purchasing
manager’s trade-offs on one versus several suppliers—lower cost versus greater supply-chain resilience—will
give sales differing amounts of headroom within which to strike a deal. An environmental disaster in one asset may
slow down governmental approvals for completely unrelated assets, or damage the brand. So a key focus of risk
management in corporates is bringing a risk lens to inform precisely those decisions where the risk profile of the
whole company actually is being changed. Exactly which decisions these are depends on the individual company,
but it typically includes three categories:
ƒƒ Significant operating decisions where the consequences affect others than the decision maker, such as supply-
chain management (“Do we sole source at an expected saving but with less resilience?”), pricing, (“How much
contingency do we need to factor into pricing our response to this RFP?”), product development and exploitation
(“Public backlash against genetic modification could exceed share losses in this category”)
ƒƒ Business planning and overall strategic decisions, for instance, overall choice of strategy (“Do we expand
overseas?”), capital investment (“We have $300 million of growth capital to invest and $700 million of ideas, with
some of those ideas more risky than others.), as well as supporting financing decisions, (“Can we afford to lever
up, and what if we hedged our fuel spend?”)
ƒƒ Opportunistic strategic decisions (“Do we do this MA deal?,” “Do we pull out from this market that is doing less
well than expected?”)
These are, of course, not purely risk decisions, but the key contribution of risk management is to frame the risk trade-
offs and provide the insight to support informed management and board dialogue.
Risk organization and governance. There are some obvious differences in risk organization and governance
between corporates and financial institutions. In particular, many fewer corporates have a C-suite level chief
risk officer (CRO) and a dedicated risk committee on their boards. This is discussed further below, but it is
a consequence of more fundamental differences in overall risk organization and governance. As we look at
companies in all sectors, we see four different types of role for a central risk group (Exhibit 2).
These four models are not stages in a maturity spectrum; there is no “right” or “better” answer. Apart from tradition
and organizational inertia, the most important drivers for the appropriate choice are as follows:
ƒƒ the complexity of the company’s risks. In particular, are crucial risks generated in the same organizational unit
that bears the consequences and can effectively mitigate them?
ƒƒ the degree of confidence in the treatment of risk by existing management processes and culture
In this realm, financial institutions generally fall squarely in one of the two buckets on the right. While basic risk
taking remains an integral part of each manager’s responsibility, events have repeatedly shown the myriad ways
that careless or overly aggressive risk taking in one desk or department can reverberate across an organization.
Processes are quite well developed, but it is a prisoner’s dilemma–like situation, in which it is often in the personal
interest of a talented individual to surf the boundaries of the risk policies or limits that are in place. This relates directly
to the internal competition for risk capital, since taking on an extra bit of actual risk should create additional return,
and if the risk is misevaluated by the systems and processes in place as being lower than it actually is, the indirect
result is that the individual is “credited” with a higher risk-adjusted return.
9. Enterprise risk management: What’s different in the corporate world and why 7
In contrast, corporates are all over the map, sometimes even in one sector. Donald Humphreys, senior vice
president and treasurer of Exxon Mobil said in 2009 that the company does not believe in maintaining a separate
risk organization, rather that risk management is naturally a direct responsibility of line management. This articulates
an important principle: that operational risks in particular are best managed in situ in order to avoid diluting
responsibility. This does not mean Exxon Mobil does not conduct risk management; on the contrary, its processes
are quite sophisticated and it has systems in place to track risks and ensure preparedness/response. However, it has
chosen to limit the central organizational oversight dedicated to risk.
On the other hand, several other major petroleum companies are moving from an “aggregate-risk-insight” model
more to the right, having experienced increasing complexity in managing their strategic oil price and geopolitical
exposures, as well as having seen the disasters that ensue if operational risks are poorly managed and a
dysfunctional overall approach to risk takes hold.
Indeed, the distinction is one of balance. A common framework for risk management, especially in the financial
sector, is that of “three lines of defense,” the first being line management/front office, the second the risk-
management function (and/or other control functions), and the third compliance and audit. This framework is
typically brought out to emphasize that the risk-management function does not operate in isolation, and that robust
risk management requires all three defensive lines to be in place. In this context, the differences among our four
organizational models require choosing which lines of defense to prioritize. As one moves from left to right, the
second line of defense (a central-risk-management function) takes on a more prominent role, while on the left-hand
side, one is placing more reliance on culture and processes followed by the first line—and likely expanding the role
of the third line of defense as a way of confirming that these processes are followed, compared to when a strong
second line is present.
Indeed,theimportanceofriskculture—mind-setsandbehaviorsofallemployeesregardingrisk-taking—isincreasingly
beingrecognizedthroughoutallindustrysectors.Earlierworkonclassifyinganddiagnosingculturalhotspotsforrisk
viaasurvey-drivendiagnostic3
allowedanempiricalobservationoftherelativelylowlevelofsystematicdifference
betweensectors.Therearesignificantdifferencesbetweencompanies,ofcourse,andoftenbetweenbusinessunits
inthesamecompany,butcharacteristicissuesrelatingtopoortransparencyonrisktolerance(“Whatareweallowedto
do?”),lackofopennessandfeartochallenge(“Everyoneknewitwasabadidea,butnoonefelttheycouldobject”),and
speedofresponseorgamingthesystem(suchasfindingwaystoarbitragetransferpricingthatallowsoneunittokeep
thebenefitfromrisktakingbutpassesonthedownsideelsewhereinsidethecompany)areubiquitous.
Exhibit 2 There are four different roles for the central risk group.
1 If there is any kind of central risk group at the organization; this model can be run with just line management.
2 Chief risk officer.
Support line risk
ownership1
▪ Line management owns
risks
▪ Minimal central risk
function provides expert
advice on demand
▪ Risk optimization effected
by a strong business
and risk culture
Aggregate risk insight
▪ Line management owns
risks
▪ Small central risk team
aggregates risk insight,
integrates across
enterprise
▪ Risk optimization
performed by overall
management, with
informational support
from central risk team
Provide checks and
balances
▪ Line management owns
risks
▪ Central risk team led
by CRO2
with a seat at
the table, acting as
counterweight for
important strategic
decisions
▪ CRO acts as thought
partner to business
heads
Actively manage risks
▪ Risk function owns and
actively monitors and
manages certain key
risks centrally (eg, FX
hedging, trading/credit
limits)
▪ Business heads get
approval on other risk
strategies from CRO
3 McKinsey Working Paper on Risk, Number 16, “Taking control of organizational risk culture,” (mckinsey.com).
12. 10
are respected company insiders from adjacent fields who take on the mantle of risk management (sometimes
on a temporary rotational basis as part of a general career progression) and develop tailored expertise and
approaches, rather than external “industry professionals” looking to deploy the next generation of improved
standardized approaches.
Areas of greatest—and least—opportunity for sharing
Which financial-sector tools and ideas will offer the most support to a newly arrived risk manager setting up shop
in a corporation?
Rigorous risk dialogue. While the specifics of the risks being discussed and the level of information available about
them can vary, the typical corporate can gain much by implementing a regular, fact-based, and timely dialogue on
risk throughout the organization. A daily comprehensive risk report, with up-to-date assessments of risk levels by risk
type and business unit, as in leading banks, is probably both impossible and impractical. However, expanding the
paradigm beyond a risk register and/or risk heat map that is reviewed once a quarter (or once a year!) is crucial!
Careful quantification of risk and concept of risk-adjusted return. While VAR has become a bad word in many
circles, thoughtful quantification of risks, recognizing that at different (approximate) probability levels they may have
radically different levels of impact, can be highly beneficial. And while a black-box calculation of risk-adjusted return on
capital or some other metric that, as if by magic, purports to derive “correct” returns for risk is rarely the right answer, a
recognition that returns need to be compared and evaluated with a consideration for the level and nature of risks taken
to achieve them is another key ingredient.
Aggregated risk across the enterprise, including stress testing, in particular. The response to the financial
crisis (in part driven by external stakeholders) has sharpened the focus of financial institutions on assessing the
aggregate impact of risks across the organizations. The same should be the case for corporates, if for no other
reasons than to make more agile and informed decisions in the face of macro-uncertainty. The philosophy of stress
testing, in particular, exploring the combined impact of a consistent multifactor set of risk assumptions on all the
relevant key performance metrics of a company, and likely consequences (for example, credit-rating resilience), is a
rich area of opportunity.
On the other hand, what are some of the key preconceptions from the financial sector that are most likely to trip up our
corporate-risk manager and confound otherwise enthusiastic colleagues?
A “standardized” risk taxonomy. As discussed, the classification and aggregation of risks across a corporate is a
valuable and never-ending exercise. But there is no “standard” risk taxonomy—even by industry sector—to structure
the analysis akin to the standard financial-risk factors (market, credit, operational, liquidity, etc.). Untangling the
Gordian knot of risk in a typical corporate has no easy solution.
Rigidity in approach to risk organization and governance. As discussed above, there is an established
model for the role of the risk-management function—and of risk oversight—in a financial institution. The situation in a
corporate depends much more on the nature of the risks and of the overall management system—and stakeholder
expectations may well be poorly defined or inappropriate given the nature of the business. Finding the right solution
and the right trajectory to get there can be one of the most complex tasks facing a corporate risk manager.
Insufficient focus on teaching, coaching, and listening to the business. While this may be an
oversimplification, the typical credit manager or investment portfolio manager in a financial institution generally feels
that he or she is knowledgeable enough to manage his or her own risks, even though they recognize the importance of
coordination, aggregation, and oversight by the central risk function. In contrast, while many corporate line managers
equally feel knowledgeable about risks they “own,” there is, in general, a greater need for coaching on how to deal with
13. Enterprise risk management: What’s different in the corporate world and why 11
risk and uncertainty, teaching basic risk concepts and frameworks, and listening to the business and translating any
insights for others.
Finally, suppose the same risk manager later returns to the financial sector (or—like some readers—never leaves
it in the first place). There are some areas where the best organically developed practices in risk management in
corporates would make good role models for financial institutions:
Top management focus on big bets or so-called mega-risks. As discussed, some of the biggest corporates
have increasingly made efforts to identify and discuss their top risks, aggregated across the business, and,
importantly, articulated in a way that recognizes how the risks are likely to arise. Financial institutions have been
too hamstrung by their risk taxonomy to cut through it for truly franchise-affecting risks—such as the deep-seated
crisis in Europe, the slowdown in Chinese economic growth, or even fraud that affects the institution’s reputation or
confidence in a profound way. Many a financial institution would do well to interrupt the discussion of market and credit
risk and preface and frame its discussion of stress testing with a period of identification of and reflection on the handful
of big bets the bank is truly taking.
Broad discussion on risk appetite and strategic choice of risks to take. This seems like an odd factor to
include, since these days financial institutions are quite preoccupied with risk-appetite discussions. But by and large,
these are discussions about how to articulate risk appetite to stakeholders, and how to set the overall risk tolerance—
areas where many corporates are weak. Going the other way, financial institutions rarely emphasize the debate over
which risks they are in an optimal position to deploy their risk capacity against in order to extract value, and the risks
in which they want to “invest” for growth. They could well learn from corporates in this area. Financial institutions
generally do a good job of making individual decisions, for example, with credit underwriting, or using a risk-return lens
with market positions. However, they tend to be weaker with the fundamental decisions about “where do we play?”
Conclusion
There are both important similarities and differences between risk management in financial institutions and in
corporates. This is the nature of the particular risks each face and the way these risks are reflected in a company’s
value creation and management culture. In particular, there are interesting conceptual and good-practice-transfer
opportunities to consider—provided one steps beyond overly simplistic approaches that position one sector as
an overall risk-management leader, does not reject it out of hand due to the challenges of recent years, or limits
consideration purely to the mechanics of assessing or reporting specific shared risk types. The way forward for both
financial and nonfinancial companies is best articulated as a situation-specific integration of approaches, rather
than a wholesale adoption or rejection of a rigid set of choices. Even within sectors, companies can justifiably adopt
quite different approaches at the enterprise level, provided there is adequate dialogue with all stakeholders. At this
stage, there are the beginnings of back-and-forth executive movement between sectors, and there will be more in the
future. It follows that debate and clarity around what works and what is likely to fail will only become more essential for
effective enterprise risk management across the board.
14. Martin Pergler is a senior risk expert in McKinsey’s Montreal office.
The author wishes to acknowledge the contributions of Andrew Freeman, Arno Gerken, Rob McNish, and Tony
Santomero to the development of this paper.
Contact for distribution: Francine Martin
Phone: +1 (514) 939-6940
E-mail: francine_martin@mckinsey.com
15. 1. The risk revolution
Kevin Buehler, Andrew Freeman, and Ron Hulme
2. Making risk management a value-added function in the boardroom
Gunnar Pritsch and André Brodeur
3. Incorporating risk and flexibility in manufacturing footprint decisions
Martin Pergler, Eric Lamarre, and Gregory Vainberg
4. Liquidity: Managing an undervalued resource in banking after the
crisis of 2007–08
Alberto Alvarez, Claudio Fabiani, Andrew Freeman, Matthias Hauser, Thomas
Poppensieker, and Anthony Santomero
5. Turning risk management into a true competitive advantage:
Lessons from the recent crisis
Gunnar Pritsch, Andrew Freeman, and Uwe Stegemann
6. Probabilistic modeling as an exploratory decision-making tool
Martin Pergler and Andrew Freeman
7. Option games: Filling the hole in the valuation toolkit for strategic investment
Nelson Ferreira, Jayanti Kar, and Lenos Trigeorgis
8. Shaping strategy in a highly uncertain macroeconomic environment
Natalie Davis, Stephan Görner, and Ezra Greenberg
9. Upgrading your risk assessment for uncertain times
Martin Pergler and Eric Lamarre
10. Responding to the variable annuity crisis
Dinesh Chopra, Onur Erzan, Guillaume de Gantes, Leo Grepin, and Chad Slawner
11. Best practices for estimating credit economic capital
Tobias Baer, Venkata Krishna Kishore, and Akbar N. Sheriff
12. Bad banks: Finding the right exit from the financial crisis
Luca Martini, Uwe Stegemann, Eckart Windhagen, Matthias Heuser, Sebastian
Schneider, Thomas Poppensieker, Martin Fest, and Gabriel Brennan
13. Developing a post-crisis funding strategy for banks
Arno Gerken, Matthias Heuser, and Thomas Kuhnt
14. The National Credit Bureau: A key enabler of financial infrastructure and
lending in developing economies
Tobias Baer, Massimo Carassinu, Andrea Del Miglio, Claudio Fabiani, and
Edoardo Ginevra
15. Capital ratios and financial distress: Lessons from the crisis
Kevin Buehler, Christopher Mazingo, and Hamid Samandari
16. Taking control of organizational risk culture
Eric Lamarre, Cindy Levy, and James Twining
17. After black swans and red ink: How institutional investors can rethink
risk management
Leo Grepin, Jonathan Tétrault, and Greg Vainberg
18. A board perspective on enterprise risk management
André Brodeur, Kevin Buehler, Michael Patsalos-Fox, and Martin Pergler
19. Variable annuities in Europe after the crisis: Blockbuster or niche product?
Lukas Junker and Sirus Ramezani
20. Getting to grips with counterparty risk
Nils Beier, Holger Harreis, Thomas Poppensieker, Dirk Sojka, and Mario Thaten
21. Credit underwriting after the crisis
Daniel Becker, Holger Harreis, Stefano E. Manzonetto, Marco Piccitto,
and Michal Skalsky
McKinseyWorkingPapersonRisk
EDITORIAL BOARD
Rob McNish
Managing Editor
Director
Washington, DC
rob_mcnish@mckinsey.com
Martin Pergler
Senior Expert
Montréal
Andrew Sellgren
Principal
Washington, DC
Anthony Santomero
External Adviser
New York
Hans-Helmut Kotz
External Adviser
Frankfurt
Andrew Freeman
External Adviser
London
16. 22. Top-down ERM: A pragmatic approach to manage risk from the C-suite
André Brodeur and Martin Pergler
23. Getting risk ownership right
Arno Gerken, Nils Hoffmann, Andreas Kremer, Uwe Stegemann, and
Gabriele Vigo
24. The use of economic capital in performance management for banks: A perspective
Tobias Baer, Amit Mehta, and Hamid Samandari
25. Assessing and addressing the implications of new financial regulations
for the US banking industry
Del Anderson, Kevin Buehler, Rob Ceske, Benjamin Ellis, Hamid Samandari, and Greg Wilson
26. Basel III and European banking: Its impact, how banks might respond, and the
challenges of implementation
Philipp Härle, Erik Lüders, Theo Pepanides, Sonja Pfetsch, Thomas Poppensieker, and Uwe
Stegemann
27. Mastering ICAAP: Achieving excellence in the new world of scarce capital
Sonja Pfetsch, Thomas Poppensieker, Sebastian Schneider, and Diana Serova
28. Strengthening risk management in the US public sector
Stephan Braig, Biniam Gebre, and Andrew Sellgren
29. Day of reckoning? New regulation and its impact on capital markets businesses
Markus Böhme, Daniele Chiarella, Philipp Härle, Max Neukirchen, Thomas Poppensieker,
and Anke Raufuss
30. New credit-risk models for the unbanked
Tobias Baer, Tony Goland, and Robert Schiff
31. Good riddance: Excellence in managing wind-down portfolios
Sameer Aggarwal, Keiichi Aritomo, Gabriel Brenna, Joyce Clark, Frank Guse, and Philipp
Härle
32. Managing market risk: Today and tomorrow
Amit Mehta, Max Neukirchen, Sonja Pfetsch, and Thomas Poppensieker
33. Compliance and Control 2.0: Unlocking potential through compliance and quality-
control activities
Stephane Alberth, Bernhard Babel, Daniel Becker, Georg Kaltenbrunner, Thomas
Poppensieker, Sebastian Schneider, and Uwe Stegemann
34. Driving value from postcrisis operational risk management : A new model for financial
institutions
Benjamin Ellis, Ida Kristensen, Alexis Krivkovich, and Himanshu P. Singh
35. So many stress tests, so little insight: How to connect the ‘engine room’ to the
boardroom
Miklos Dietz, Cindy Levy, Ernestos Panayiotou, Theodore Pepanides, Aleksander Petrov,
Konrad Richter, and Uwe Stegemann
36. Day of reckoning for European retail banking
Dina Chumakova, Miklos Dietz, Tamas Giorgadse, Daniela Gius, Philipp Härle,
and Erik Lüders
37. First-mover matters: Building credit monitoring for competitive advantage
Bernhard Babel, Georg Kaltenbrunner, Silja Kinnebrock, Luca Pancaldi, Konrad Richter, and
Sebastian Schneider
38. Capital management: Banking’s new imperative
Bernhard Babel, Daniela Gius, Alexander Gräwert, Erik Lüders, Alfonso Natale, Björn
Nilsson, and Sebastian Schneider
39. Commodity trading at a strategic crossroad
Jan Ascher, Paul Laszlo and Guillaume Quiviger
40. Enterprise risk management: What’s different in the corporate world and why
Martin Pergler
McKinseyWorkingPapersonRisk