Conduct Risk is sweeping the financial services world and catching many risk manager out as there is still a lack of understanding.
Our Compliance Manual is available at http://bit.ly/ComplianceManualTemplate
Risk management need to determine the corporate risk philosophy and appetite. To assess or understand the risk philosophy, try to comprehend the organisation's culture, values and environment. The way business operations are conducted on a daily basis and the organisation’s strategy are typically good indicators where you can find the company risk philosophy. Assess whether business has an aggressive, innovative, typical or conservative attitude towards risks for achieving business goals.
Risk appetite is simply the amount of risk which the organisation is willing to take to undertake business activities and achieve the business objectives, where Conduct Risk is concerned this has to include good customer outcomes. A simple question to ask the board of members could be “What amount of reported mismanagement or public uproar would make you uncomfortable if it appeared in the business newspapers?”
Consolidate the various risk exposures from the risk department's identified risks and present them to the board. Finally, assess whether the company’s internal perception and rhetoric on risk philosophy and appetite are consistent with the board and other stakeholder's viewpoints. Realign the two where required to prepare the annual strategy.
Build Your Framework.
Enterprise Risk Management and SustainabilityJeff B
An overview of our endeavors at implementing ISO 31000 enterprise risk management and the importance of establishing good risk culture within the company.
This presentation focuses on the principles and practicalities of establishing a working risk appetite statement supported by risk limits and tolerances.
Enterprise Risk Management and SustainabilityJeff B
An overview of our endeavors at implementing ISO 31000 enterprise risk management and the importance of establishing good risk culture within the company.
This presentation focuses on the principles and practicalities of establishing a working risk appetite statement supported by risk limits and tolerances.
This presentation is the one stop point to learn about Basel Norms in the Banking
This is the most comprehensive presentation on Risk Management in Banks and Basel Norms. It presents in details the evolution of Basel Norms right form Pre Basel area till implementation of Basel III in 2019 along with factors and reason for shifting of Basel I to II and finally to III.
Links to Video's in the presentation
Risk Management in Banks
https://www.youtube.com/watch?v=fZ5_V4RW5pE
Tier 1 Capital
http://www.investopedia.com/terms/t/tier1capital.asp
Tier 2 Capital
http://www.investopedia.com/terms/t/tier2capital.asp
Basel I
http://www.investopedia.com/terms/b/basel_i.asp
Capital Adequacy Ratio
http://www.investopedia.com/terms/c/capitaladequacyratio.asp
Basel II
http://www.investopedia.com/video/play/what-basel-ii/?header_alt=c
Basel III
http://www.investopedia.com/terms/b/basell-iii.asp
RBI Governor - Raghuram G Rajan on the importance if Basel III regulations
https://youtu.be/EN27ZRe_28A
Operational risk management and measurementRahmat Mulyana
a short description in mixed English and Bahasa Indonesia on Operational Risk Management and Measurement, in particular value at risk calculation using Monte carlo Simulation. Another method using EVT (Extree Value Theory) will be delivered shortly. regards
Safeguard your lending program by learning about the 8 steps of credit risk management. Learn about nonfinancial risks, structuring the loan, and more.
Risk management is an integral part of business management. This set of principles was developed by the industry for the industry. They have been drafted to make them so practical that they will resonate with any financial organization.
Regulations are integral to the banking industry, and the extent to which the bank complies with such regulations not just maintains its bottom line in terms of avoiding hefty fines, but also has a big bearing on credibility and integrity. So how do banks comply with all that is required, and save themselves from the ill-effects of non-compliance?
Operational Risk Management Under Basel II & Basel IIIEneni Oduwole
In this introductory presentation on the subject, salient features that changed in approaches adopted for Operational Risk Management under Basel I and Basel I were highlighted.
Business Case Study on PricewaterhouseCoopers (PwC)Karthik Krishnan
A Case Study on PricewaterhouseCoopers (PwC) highlighting the leaders of it's Indian Management and Global as well. Also, Highlighting the Business Functions and it's leaders.
This presentation is the one stop point to learn about Basel Norms in the Banking
This is the most comprehensive presentation on Risk Management in Banks and Basel Norms. It presents in details the evolution of Basel Norms right form Pre Basel area till implementation of Basel III in 2019 along with factors and reason for shifting of Basel I to II and finally to III.
Links to Video's in the presentation
Risk Management in Banks
https://www.youtube.com/watch?v=fZ5_V4RW5pE
Tier 1 Capital
http://www.investopedia.com/terms/t/tier1capital.asp
Tier 2 Capital
http://www.investopedia.com/terms/t/tier2capital.asp
Basel I
http://www.investopedia.com/terms/b/basel_i.asp
Capital Adequacy Ratio
http://www.investopedia.com/terms/c/capitaladequacyratio.asp
Basel II
http://www.investopedia.com/video/play/what-basel-ii/?header_alt=c
Basel III
http://www.investopedia.com/terms/b/basell-iii.asp
RBI Governor - Raghuram G Rajan on the importance if Basel III regulations
https://youtu.be/EN27ZRe_28A
Operational risk management and measurementRahmat Mulyana
a short description in mixed English and Bahasa Indonesia on Operational Risk Management and Measurement, in particular value at risk calculation using Monte carlo Simulation. Another method using EVT (Extree Value Theory) will be delivered shortly. regards
Safeguard your lending program by learning about the 8 steps of credit risk management. Learn about nonfinancial risks, structuring the loan, and more.
Risk management is an integral part of business management. This set of principles was developed by the industry for the industry. They have been drafted to make them so practical that they will resonate with any financial organization.
Regulations are integral to the banking industry, and the extent to which the bank complies with such regulations not just maintains its bottom line in terms of avoiding hefty fines, but also has a big bearing on credibility and integrity. So how do banks comply with all that is required, and save themselves from the ill-effects of non-compliance?
Operational Risk Management Under Basel II & Basel IIIEneni Oduwole
In this introductory presentation on the subject, salient features that changed in approaches adopted for Operational Risk Management under Basel I and Basel I were highlighted.
Business Case Study on PricewaterhouseCoopers (PwC)Karthik Krishnan
A Case Study on PricewaterhouseCoopers (PwC) highlighting the leaders of it's Indian Management and Global as well. Also, Highlighting the Business Functions and it's leaders.
Creating a sustainable culture of high performancev8ValuesCentre
Leadership seminar with aAdvantage Consulting 10 September in Singapore. A shared presentation by Vincent Ho (aAdvantage) and Tor Eneroth (Barrett Values Centre).
Australian Government,
Corporate and NGO
partnerships establish
The Dandelion Program
to deliver social and
economic benefits for
workers with Autism
Spectrum Disorder and all
Australians
Portfolio Management in times of uncertainty
Sandie Grimshaw
Balancing your change portfolio
APM Portfolio Management SIG Conference 2017,
11 May 17,
Holiday Inn Bloomsbury, London
Nine Steps of Collaboration with Craig NealValuesCentre
2016 CTT International Conference:
Craig Neal shares the nine steps of collaboration, including a case study of how the steps have been applied in government and relates to public engagement.
This APM event was co-organised by the ProgM and Governance SIGs in conjunction with our good friends at PWC. [Full write up: http://bit.ly/apmpwcsurvey]
As Miles Dixon and I introduced the evening, I knew that we were in for some fun as Karl Reilly @karl_reilly_pwc, our host, speaker for the evening and veteran of programme management, let it be known that he would ‘ask the audience’ to send in their votes using software called Poll Everywhere. [You only have to look at the website of this tool to realise just how engaging this can be for a live audience!]
As part of my introduction I threw out a couple of challenges. Firstly with the well-known saying ‘lies, damned lies and statistics’ - why should we trust what this survey from PWC says?
Also, “Isn’t it rather shocking that out of more than 3,000 respondents from more than 100 countries, only half [50%] agreed that ‘an appropriate baseline exists to measure all benefits for their organisation [projects and programmes]’
If this really is the case how can change commissioners possibly know whether they have got what they wanted in the first place?
The 4th PwC Global PPM Survey, conducted in 2014 looked at; trends, challenges, opportunities and opinions relating to the management of portfolios, programmes and projects.
During the evening we were invited to vote by text and web on our smartphones [one of those rare ‘don’t switch your phones off’ evenings] on various survey questions. The results and opinions of ‘we happy few’ were compared to those of the much larger global population.
So for example. On the question of “Where benefits are set, are they realised?” [Slide 12] illustrates the fact that audience opinion [yellow] is broadly similar with the global view [orange] this certainly wasn’t the same in every case and led to some interesting debate.
Sandie Grimshaw, who led the survey team, joined us part way through the session - after a long day at work. She says “The results are both interesting and enlightening, especially when considered with the findings of previous surveys, and also with the results that we find when PWC undertakes maturity assessments around the world on client programmes.
I believe our survey findings have provided a fresh perspective for executive teams, as well as giving PPM professionals evidence from which to re-evaluate their priorities and approach to delivering successful change programmes.”
Not being one to miss an opportunity, Alan Macklin, ProgM committee member and Deputy Chair of APM Board, stated APM’s desire to be involved in the next survey round 2015/16 as he sees it as an opportunity to extend our own work on Conditions for Project Success.
In addition, in a short infomercial, the audience were invited to attend our inaugural APM Benefits Summit [23-25 June] - partially in response to the survey’s findings on Benefits Management uptake!
Merv Wyeth
Putting digital technology and data to work for Tech CMO'sPwC
Tech Company CMOs are uniquely positioned to successfully leverage digital technologies and data to significantly impact business performance. At PwC, we're helping to change the goal of digital marketing from clicks and views to customer experiences designed to generate business performance. Explore how.
Conduct risk beyond the rulebook bovill briefing march 2014Bovill
Bovill - the UK financial services regulatory consultancy - runs regular briefings. These are the slides from the March briefing on Conduct Risk. For more information visit www.bovill.com.
Further information on the event is below:
Conduct Risk: beyond the rule book
“One of the features of regulation, historically, was that it was all about compliance. Were a particular set of rules followed? Could a firm demonstrate and document that it had followed those rules to the letter? This created a cottage industry out of compliance – but did not necessarily lead to good outcomes…””
Martin Wheatley, CEO, Financial Conduct Authority
The FCA rulebook still matters, as any firm who has had a brush with the rules on client money and assets will know. However, the financial crisis showed that traditional compliance can mean the firm only knows what went wrong yesterday. Understanding what might happen tomorrow is equally important.
Managing Conduct Risk is now a key FCA expectation. It involves understanding what outcomes will flow from today’s actions – for the firm, its customers and the financial markets more broadly. And the Conduct Risk agenda is now more likely to involve smaller firms.
Bovill’s briefing looked at Conduct Risk and covered:
• What is Conduct Risk and where did the idea come from?
• What regulatory powers does the FCA use in its approach?
• How can you manage Conduct Risk?
In this edition of Regulatory Focus, Duff & Phelps provides a synopsis of the FCA's latest news and publications issued in May 2017.
Highlights include:
MiFID II Topics and Challenges
FCA's increased focus on cyber resilience
Guidance on the Criminal Finances Act 2017
Embracing the Consumer Duty Imperative: A Comprehensive GuideRNayak3
With the Financial Conduct Authority introducing changes to its Consumer Duty regulations, this paper elucidates the implications and consequences of non-compliance.
Another year has gone by and the FCA’s combined Business Plan and Risk Outlook has been released… So what’s new and what does it mean for your firm?
Our briefing walked through the key messages of the document and took a look back at 2015’s release. We also explored what you might need to be doing differently in the year ahead.
Social Media, or website, one of the biggest questions people always ask is, to get onto Google page 1, or to get a good google ranking, what is the ideal length of things online. As things vary from URLs to blog posts, podacasts to videos the only answer is quite simply everything online should be long enough to convey the message and no longer. Social media posts are awash with way too much information and websites go overboard with cramming too much in, making for poor SEO and bad experiences, therefore not converting. Too much and it looks cheap. Too little and it doesn't raise interest. More details are at http://letstalksocialmedia.co
Most Employees Consider Their Private And Work Lives To Be Totally Separate, But Social Media and Social Networking Has Silently And Effectively Bridged That Gap And Blurred That Distinction.
No matter how “separate” a person’s social accounts may seem to be, there will ultimately be someone, somewhere that will link-up that person to your organisation or firm.
Social Media Policy Template http://wp.me/p4RKCt-5P
Risk Mitigation, when applied properly and effectively, will keep the likelihood of a S166 Skilled Person's Report ever being issued against your firm. Yet so often we see reports in "Final Notices" from the FCA that people risk and compliance managers didn't "understand" or "appreciate" the levels of risk they were courting, or they failed to properly notify the board of the issues and tried to stick their heads in the sand. A S166 is a costly business, and not only in the money charged by the Skilled Person, but also in management time, resources, staff liaison and assistance, printing, extra committee meetings, the list goes on.
Then there comes the Risk Mitigation Programme (RMP) that the regulator creates for the firm, a bespoke program to get things right. This, if not managed properly (and they often are not) can result in changes forced into the business but not understood by anyone; no culture change, and things reverting to normal within months after the completion.
To manage a S166 or RMP requires a project manager that fully understands not only the process, but also the inferences and interpretation of the regulators statements - to act on the spirit as well as the letter, and advise you accordingly.
Alex is a Compliance Director who has a number of issues. He finds an affordable, professional and discrete answer to his regulatory problems with a niche consultant, Compliance Consultant (tel 020 7097 1434)
The UK Regulators (FCA/PRA) are introducing a revised Senior Manager's Regime, taking over from the existing Approved Person's regime in June 2015. This gives you a high level overview and next steps to take to ensure your firm is ready.
Setting Conduct Risk Appetite. Assessing risk and identifying cultural driver...Compliance Consultant
Conduct Risk is sweeping the financial services world and catching many risk manager out as there is still a lack of understanding.
Risk management need to determine the corporate risk philosophy and appetite. To assess or understand the risk philosophy, try to comprehend the organisation's culture, values and environment. The way business operations are conducted on a daily basis and the organisation’s strategy are typically good indicators where you can find the company risk philosophy. Assess whether business has an aggressive, innovative, typical or conservative attitude towards risks for achieving business goals.
Risk appetite is simply the amount of risk which the organisation is willing to take to undertake business activities and achieve the business objectives, where Conduct Risk is concerned this has to include good customer outcomes. A simple question to ask the board of members could be “What amount of reported mismanagement or public uproar would make you uncomfortable if it appeared in the business newspapers?”
Consolidate the various risk exposures from the risk department's identified risks and present them to the board. Finally, assess whether the company’s internal perception and rhetoric on risk philosophy and appetite are consistent with the board and other stakeholder's viewpoints. Realign the two where required to prepare the annual strategy.
Reducing regulatory capital by instigating risk management system and operati...Compliance Consultant
After assessing the risk management operation of a FTSE 100 company we soon identified that Operational Risk Management needed augmenting on their global risk framework. After 10 months work the savings were reflected in the reduction of regulatory capital requirements of over 18% (almost £100M).
Operational risk and risk management across multi-jurisdictions for internati...Compliance Consultant
A multi-jurisdictional banking group needed their Operational Risk Framework (designed by their parent company) to be rolled out and training given n risk reporting.
Increasing your chances of success by engaging with a niche consultancyCompliance Consultant
Fortunately, there are more positive alternatives to using a smaller consultancy compared to the Accentures, McKinseys or the big accountancy firms like Deloitte, E&Y etc. We not only consider that size doesn’t matter, but large size can actually be a disadvantage in meeting your needs.
The FSA published CP12/2 in January 2012setting out some of its proposals for changes to the considerable and substantive content of the Listing Rules; Prospectus Rules; and Disclosure Rules and Transparency Rules which it identified as being necessary for change to ensure that the operational effectiveness of the Listing Regime is maintained. The changes sought to ensure that the Rules properly reflect recent changes in contemporary market practices and so would allow the UK Listing Authority (UKLA) to continue to meet its objectives.
This consultation paper raised some wider issues concerning the nature of the premium listing standard and undertook, dependant upon responses, consideration to developing specific options or proposals for discussion in a further paper.
The Financial Services Authority (FSA) issue Final Notices whenever they have disciplined or censured a firm or individual for whatever reason.
In November 2012 the FSA imposed a £10.5 million fine on Card Protection Plan Limited (CPP) for the mis-selling of insurance products.
Whilst the details are interesting and obviously relevant to the company’s either ignorance or arrogance, the end result was due to a failure of the FSA Principles, a list of 11 time forged values that firms, even today still breach fairly consistently, and always at their cost.
The Financial Services Authority (FSA) issue Final Notices whenever they have disciplined or censured a firm or individual for whatever reason.
The Principles are;
Integrity: A firm must conduct its business with integrity.
Skill, care and diligence: A firm must conduct its business with due skill, care and diligence.
Management and control: A firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.
Financial prudence: A firm must maintain adequate financial resources.
Market conduct: A firm must observe proper standards of market conduct.
Customers' interest: A firm must pay due regard to the interests of its customers and treat them fairly.
Communications with clients: A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading.
Conflicts of interest: A firm must manage conflicts of interest fairly, both between itself and its customers and between a customer and another client.
Customers: relationships of trust: A firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgment.
Clients' assets: A firm must arrange adequate protection for clients' assets when it is responsible for them.
Relations with regulators: A firm must deal with its regulators in an open and cooperative way, and must disclose to the FSA appropriately anything relating to the firm of which the FSA would reasonably expect notice.
The cost of complying with the regulations may seem expensive
and some even see it as a lost cost,
however, if you fail to run your business compliantly due to ignorance, arrogance or some other reason be it personal, cultural or even political;
make sure you have plenty of spare cash in your savings account.
Cp1230 FSA consultation paper summary: complaints against the regulatorsCompliance Consultant
This will be of interest to all firms and individuals that will come under the new UK regulators as regulated, registered or authorised.
Background
The FSA are currently required to make arrangements for the “investigation of complaints arising in connection with the exercise of, or failure to exercise, any of its functions (other than its legislative functions)” under the Financial Services and Markets Act 2000 (FSMA).
The latest version of the Financial Services Bill requires the Financial Conduct Authority (FCA), the Prudential Regulation Authority (PRA), and the Bank of England to establish how they will investigate complaints against themselves.
The Bank of England and the Financial Services Authority (FSA) jointly published a 34-page Consultation Paper (CP) 12/30 entitled ‘Complaints against the regulators – (The Bank of England, Financial Conduct Authority and Prudential Regulation Authority)’, on 6 November 2012.
UCIS is an acronym for Unregulated Collective Investment Schemes and the term unregulated can lead to confusion with inexperienced investment advisers as well as clients.
Many perfectly normal and commonly understood Collective Investment Schemes (CIS) are sold to investors throughout the UK. These CIS are regulated and are authorised by the Financial Services Authority (FSA) or they may also be non-UK CIS that are recognised by the FSA. The official term of recognition enables overseas CIS to be marketed to the public in the UK and the FSA will only recognise an overseas scheme if certain specified criteria are met.
CIS are a type of pooled investment. This is an arrangement that enables a number of investors to 'pool' their assets and have these managed by an independent professional, such as a fund manager who will reduce risk by investing the pooled money in one or more types of asset. Most investment ‘funds’ are collective investment schemes.
Investments are often in gilts, bonds and quoted equities, but depending on the type of scheme can go further, such as into unquoted shares or property.
UK Financial Services are regularly visited by the FSA. The visit will include random interviews with fairly deep questions asked that, when taken as a whole, if they don't add up, will require further regulatory scrutiny.
We help companies prepare for these visits and explain what the FSA are looking for, how best to respond and how to keep up your end in a very intimidating process.
CEI Compliance is the UK's fastest growing regulatory consultancy and provides associate opportunities to consultants and cost effective value to financial services and other regulated companies.
CEI Compliance is the UK's fastest growing risk & regulatory consultancy and provides associate opportunities to consultants and cost effective value to financial services and other regulated companies.
The Team Member and Guest Experience - Lead and Take Care of your restaurant team. They are the people closest to and delivering Hospitality to your paying Guests!
Make the call, and we can assist you.
408-784-7371
Foodservice Consulting + Design
Oprah Winfrey: A Leader in Media, Philanthropy, and Empowerment | CIO Women M...CIOWomenMagazine
This person is none other than Oprah Winfrey, a highly influential figure whose impact extends beyond television. This article will delve into the remarkable life and lasting legacy of Oprah. Her story serves as a reminder of the importance of perseverance, compassion, and firm determination.
Senior Project and Engineering Leader Jim Smith.pdfJim Smith
I am a Project and Engineering Leader with extensive experience as a Business Operations Leader, Technical Project Manager, Engineering Manager and Operations Experience for Domestic and International companies such as Electrolux, Carrier, and Deutz. I have developed new products using Stage Gate development/MS Project/JIRA, for the pro-duction of Medical Equipment, Large Commercial Refrigeration Systems, Appliances, HVAC, and Diesel engines.
My experience includes:
Managed customized engineered refrigeration system projects with high voltage power panels from quote to ship, coordinating actions between electrical engineering, mechanical design and application engineering, purchasing, production, test, quality assurance and field installation. Managed projects $25k to $1M per project; 4-8 per month. (Hussmann refrigeration)
Successfully developed the $15-20M yearly corporate capital strategy for manufacturing, with the Executive Team and key stakeholders. Created project scope and specifications, business case, ROI, managed project plans with key personnel for nine consumer product manufacturing and distribution sites; to support the company’s strategic sales plan.
Over 15 years of experience managing and developing cost improvement projects with key Stakeholders, site Manufacturing Engineers, Mechanical Engineers, Maintenance, and facility support personnel to optimize pro-duction operations, safety, EHS, and new product development. (BioLab, Deutz, Caire)
Experience working as a Technical Manager developing new products with chemical engineers and packaging engineers to enhance and reduce the cost of retail products. I have led the activities of multiple engineering groups with diverse backgrounds.
Great experience managing the product development of products which utilize complex electrical controls, high voltage power panels, product testing, and commissioning.
Created project scope, business case, ROI for multiple capital projects to support electrotechnical assembly and CPG goods. Identified project cost, risk, success criteria, and performed equipment qualifications. (Carrier, Electrolux, Biolab, Price, Hussmann)
Created detailed projects plans using MS Project, Gant charts in excel, and updated new product development in Jira for stakeholders and project team members including critical path.
Great knowledge of ISO9001, NFPA, OSHA regulations.
User level knowledge of MRP/SAP, MS Project, Powerpoint, Visio, Mastercontrol, JIRA, Power BI and Tableau.
I appreciate your consideration, and look forward to discussing this role with you, and how I can lead your company’s growth and profitability. I can be contacted via LinkedIn via phone or E Mail.
Jim Smith
678-993-7195
jimsmith30024@gmail.com
The case study discusses the potential of drone delivery and the challenges that need to be addressed before it becomes widespread.
Key takeaways:
Drone delivery is in its early stages: Amazon's trial in the UK demonstrates the potential for faster deliveries, but it's still limited by regulations and technology.
Regulations are a major hurdle: Safety concerns around drone collisions with airplanes and people have led to restrictions on flight height and location.
Other challenges exist: Who will use drone delivery the most? Is it cost-effective compared to traditional delivery trucks?
Discussion questions:
Managerial challenges: Integrating drones requires planning for new infrastructure, training staff, and navigating regulations. There are also marketing and recruitment considerations specific to this technology.
External forces vary by country: Regulations, consumer acceptance, and infrastructure all differ between countries.
Demographics matter: Younger generations might be more receptive to drone delivery, while older populations might have concerns.
Stakeholders for Amazon: Customers, regulators, aviation authorities, and competitors are all stakeholders. Regulators likely hold the greatest influence as they determine the feasibility of drone delivery.
Artificial intelligence (AI) offers new opportunities to radically reinvent the way we do business. This study explores how CEOs and top decision makers around the world are responding to the transformative potential of AI.
3. 3
Conduct Risk
What is Conduct Risk?
1. What is Conduct Risk ?
4. 4
Conduct Risk
What is Conduct Risk?
Conduct Risk is currently of concern
not only to the UK Regulators, but
regulators worldwide.
Due to repeated and wholesale mis-selling
or market manipulation
debacles in recent years, the whole
question of market-place conduct has
been brought into question.
5. 5
Conduct Risk
What is Conduct Risk?
Various initiatives have been tried across
the various jurisdictions, notably the
Treating Customer’s Fairly from the FSA
and the “Whistleblowing” incentive
scheme by the SEC in the USA, both in a
bid to combat poor behavior's.
6. 6
Conduct Risk
What is Conduct Risk?
Recent UK conduct risk issues examples (and we are not alone)
1: £22bn+ compensation bill for Payment Protection Insurance (PPI)
market Britain's five biggest banks – Lloyds, Barclays, Royal Bank of Scotland, HSBC and
Santander are responsible for about £19.6bn
2: CPP (Card Payment Protection) fined £10.5m and to pay redress of £14m
3: Restrictions to sale of “add-ons” for motor distributors consumers
might end up buying inappropriate or unsuitable products, or receive poor value for
money or both
4: Large-scale mis-sale of interest rate swap mortgages to Small and
Medium-sized Enterprises (SMEs)
7. 7
Conduct Risk
What is Conduct Risk?
PPI is Britain's biggest mis-selling scandal.
The amount set aside is almost double the
£11.8bn (US$18.65) bill for misleading
pension sales, and dwarfs the £2.7bn
(US$4.25) for mortgage endowments mis-selling.
8. 8
Conduct Risk
What is Conduct Risk?
Common issues in the FS markets
Product design; Terms &
conditions; Mis-selling; Charging
practices; Servicing standards;
Complaints handling; Outrageous
Incentive schemes & pressure selling
9. 9
Conduct Risk
What is Conduct Risk?
Additionally Libor and other indices
manipulation has been covertly
conducted and now created new
issues for the markets and banking as
a whole.
10. Conduct Risk
What is Conduct Risk?
10
In the same way that Fraud is not a
“Victimless Crime”, Conduct Risk
when crystallised has major
consequences and presents Solvency
and/or Liquidity Risk for all sizes of
financial firm.
11. Conduct Risk
What is Conduct Risk?
11
The resources required to manage;
Complaints
Remedial Compliance work
Training & Competence
Additional monitoring
Senior Management Time; and
12. Conduct Risk
What is Conduct Risk?
12
The cost of reparations is a constant
drain on any size of firm from small
adviser practices to international
banks.
13. Conduct Risk
What is Conduct Risk?
13
However there is no actual definition
of Conduct Risk.
The UK regulators prefer each
company to define their own
meanings and act accordingly.
14. Conduct Risk
What is Conduct Risk?
14
Checking in the FCA Handbook
Glossary …
Nothing can be found between
“COND” and “conflicts of interest
policy”.
15. Conduct Risk
What is Conduct Risk?
15
From the various speeches and
publications, a number of focus areas
become evident and include;
Strategy & Business Model
Board Engagement
Risk Management & Controls
Operations and Regulatory Controls
Customer Journey
Incentives & Rewards
16. Conduct Risk
What is Conduct Risk?
16
Certain areas the regulator could become
involved or be interested in, could
include;
Aligning business models to fair
treatment of customers
Complaints handling
Product development and governance
Product Intervention
Outsourcing
17. Conduct Risk
What is Conduct Risk?
17
Remuneration and reward policies
Financial Promotion withdrawal and
prohibition
Conflicts of interest
Incentives
Wholesale
Business Continuity
18. Conduct Risk
What is Conduct Risk?
18
On January 24th 2014 Mark Carney, Governor of the
Bank of England told bankers at a meeting in Davos
that conduct is replacing capital as the key risk facing
the industry.
He said “Banks must recognise that only exemplary
behaviour can confer social license to global financial
capitalism,” Carney said. “For the system to operate
with integrity, penalties for misconduct cannot be
seen as a cost of doing business.”
19. Conduct Risk
What does the Regulator say?
19
2. What does the Regulator say
about Conduct Risk?
20. Conduct Risk
What does the Regulator say?
20
The Financial Conduct Authority (FCA) views Conduct
Risk through the prism of their objectives:
– Consumers get financial services and products
that meet their needs from firms they can trust.
– Markets and financial systems are sound, stable
and resilient with transparent pricing information.
– Firms compete effectively, with the interests of
their customers and the integrity of markets at the
heart of how they run their business.
21. Conduct Risk
What does the Regulator say?
21
Conduct Risk =
Risk of not achieving these objectives
22. Conduct Risk
What does the Regulator say?
What about Sales of Products?
22
The regulators have always encouraged
compliance to work with marketing on
the design and management of products
for consumers
Relatively more involvement in sales
strategy and associated controls
23. Conduct Risk
What does the Regulator say?
23
The regulators consider that weak
compliance and poor Senior
Management monitoring has lead to
high profile issues in recent years
involved mis-selling.
24. Conduct Risk
What does the Regulator say?
In the mid-2000’s the FSA Introduced
the Treating Customers Fairly initiative
whereby certain desired outcomes
were declared.
24
These were …
25. Conduct Risk
What does the Regulator say?
25
Outcome 1 - Consumers can be confident that they are dealing with
firms where the fair treatment of customers is central to the corporate
culture
Outcome 2 - Products and services marketed and sold in the retail
market are designed to meet the needs of identified consumer groups
and are targeted accordingly
Outcome 3 - Consumers are provided with clear information and kept
appropriately informed before, during and after the point of sale
Outcome 4 - Where consumers receive advice, the advice is suitable
and takes account of their circumstances
Outcome 5 - Consumers are provided with products that perform as
firms have led them to expect, and the associated service is of an
acceptable standard and as they have been led to expect
Outcome 6 - Consumers do not face unreasonable post-sale barriers
imposed by firms to change product, switch provider, submit a claim or
make a complaint
26. Conduct Risk
What does the Regulator say?
26
Does The Old
“Treating
Customer’s
Fairly” (TCF)
Model Work?
30. Conduct Risk
What does the Regulator say?
30
To help answer that we would have to look at the
relevance of the TCF methods.
Did they work in changing the culture?
Can they, or a form of them, be adopted
universally?
31. Conduct Risk
What does the Regulator say?
In Hong Kong. In November 2013, the Hong Kong
Monetary Authority (HKMA) issued its Treat
Customers Fairly Charter. The charter incorporates
five high-level principles and is primarily aimed at retail
consumers. It is based on the good practices promoted
under the G20 High-Level Principles on Financial
Consumer Protection, promulgated in October 2011. All
retail banks in Hong Kong have signed up to the
charter to pledge their commitment to implementing the
treating customers fairly principles.
31
32. Conduct Risk
What does the Regulator say?
32
In Australia, ASIC has taken disciplinary action against a variety of
individuals who had made false statements to consumers or
provided unsuitable advice.
The Future of Financial Advice (FoFA) reforms came into force in
Australia in July 2013 and comprise an array of measures intended
to enhance the customer journey experience for retail consumers
when receiving financial advice.
33. Conduct Risk
What does the Regulator say?
33
In the USA there is the SEC and FINRA along with other bureaus set
up through various legislation such as Dodd-Frank.
One of these is the "Consumer Financial Protection Act of 2010", that
establishes the “Bureau of Consumer Financial Protection”. The new
Bureau regulates consumer financial
products and services in compliance with federal law.
34. Conduct Risk
What does the Regulator say?
34
More Rules?
• Between 2008 and 2013 the rules within the UK
regulators handbooks increased by 27%
• The majority of the mis-selling and market manipulation
occurred during this time
35. Conduct Risk
What does the Regulator say?
35
Regulation
Do we really need more rules?
Perhaps we need greater leadership and
personal responsibility instead?
36. Conduct Risk
What does the Regulator say?
36
As We Know … The New Regulator
for Conduct in the UK is …
37. Conduct Risk
What does the Regulator say?
37
A Change of Approach
New FCA supervision regime
New focus – “Conduct Risk” & “market integrity”
Change in approach ~ Reactive to Pre-
Emptive
“Intensive and intrusive” supervision
−Business model analysis; Additional information & reporting
− Increasing focus on thematic & event-driven visits; Deep-dives &
file reviews; CEO certification letters
− Continuing focus on “outcomes”
−Stronger intervention & enforcement
38. Conduct Risk
What does the Regulator say?
38
New intervention measures, earlier in product
life cycle
E.g. Product bans; Trading restrictions; Permission
requirements
Already reflected in visits & outcomes
• Risk Mitigation Programs (RMPs);
• Skilled Person’s Reports (S166s) & “near S166s”;
• “Attestations” by accountable executives
40. Conduct Risk
What does the Regulator say?
40
Clive Adamson, FCA director of supervision, said in
March 2014, on the need to address conduct risk;
“Achieving an effective conduct - or customer-focused
culture is challenging for firms, particularly
for those whose focus has been primarily on
profitability and shareholder returns. …
From what we see, there are key drivers that set and
re-enforce this conduct-focused culture, with the
most important being clear and ongoing leadership
from the top of the organization …”
41. Conduct Risk
Defining Strategies and Objectives
41
3. Defining Conduct Risk
Strategies and Objectives
42. Conduct Risk
Defining Strategies and Objectives
42
Questions To Be Asked
What exactly is “Conduct Risk” – how
do we define it?
What are the regulator’s expectations?
What are the practical implications /
challenges for the business?
43. Conduct Risk
Defining Strategies and Objectives
43
Questions To Be Asked
Is Conduct Risk on your/your firm’s agenda?
Why should you be concerned about Conduct
Risk?
Where does Conduct Risk sit in your Risk
Framework?
1. Operational Risk or as a discrete risk category?
2. Does it underpin or overlay other risk categories?
44. Conduct Risk
Defining Strategies and Objectives
44
How do we fit “Conduct Risk” into our
existing TCF arrangements and Risk
Management framework?
What impact will CR have on the business?
Where will “Conduct Risk” be going under
the new FCA regulatory regime?
What should we be doing now and what
approach should we take?
45. Conduct Risk
Defining Strategies and Objectives
45
How is each sector involved?
What does a good Conduct Risk management
framework look like?
What are the key obstacles to increasing
attention on Conduct Risk?
How should Conduct Risk appetite be
measured?
46. Conduct Risk
Risk Framework
46
4. How to make Conduct Risk a
part of ERM Framework?
47. Conduct Risk
Risk Framework
47
Firstly you have to decide the areas that Conduct
Risk will impact and how best to measure it.
This needs to be considered from top to bottom
and bottom to top. The high level ERM
Framework, once defined, then has to create the
relevant sub categories, which in turn lead to
operational areas and functional dependencies at
a granular level.
This then needs to be amalgamated and collated
much the same as a balanced scorecard
exercise.
48. Conduct Risk
Risk Framework
48
An initial aim is to connect the risks, controls
and other framework elements to your
company’s organisation chart. From there,
you should determine risk capacity, your
company’s current risk profile and its risk
appetite.
Next you should measure your risk appetite
adherence.
Finally, you will need to align your risk appetite
with your company’s risk governance
framework.
49. Conduct Risk
Risk Framework
49
Risks to Consider
(FCA Risk Outlook )
- Products / services
– customer needs & interests
- Distribution channels
– transparency for consumers
- Payment and product technologies
– over reliance, oversight
- Funding strategies / structures
– innovative, complex or risky
- Understanding of risk and return
– customers taking too much risk
51. Conduct Risk
Risk Framework
51
For each specific impacted area you
then need to assess the;
Conflicts of Interest that may arise
Communications with suppliers and
customers
Competence
Reward & Performance Management
Other Cultural Drivers
52. Conduct Risk
Risk Framework
52
Conflicts of
Interest
Communication
s
Other
Cultural
Drivers
Competence
Reward &
Performance
Management
53. Conduct Risk
Risk Framework
53
Then across each business area you have to
apply the Conduct Risk drivers to identify the
potential risks for your specific business model.
This should also be linked and enhance a
firm’s existing Treating Customer’s Fairly (TCF)
management practices.
56. Conduct Risk
Risk Framework
56
When you have decided the areas
that will be impacted and what
management information can be
obtained, the relevant controls and
risk appetite, you can start to build
your bespoke framework.
57. Conduct Risk
Risk Framework
57
The purpose of this part is to satisfy
the cyclical need to embed the
process and provide a clear
relationship between evidencing your
actions, providing good outcomes and
the resultant good culture.
61. Conduct Risk
Risk Framework
61
Strategy &
Business
Model
Identification
& Assessment
Appetite &
Tolerance
Reporting &
Recording
Control
Measures
Issue
Escalation and
Management
Monitoring
& MI
Governance
& Control
Measures
62. Conduct Risk
Risk Framework
62
The key to all of the Conduct Risk Framework effectiveness is
the correct monitoring and accurate reporting of data from all
parts of the business to inform the management, senior
management and executive management structures precisely
what is going on.
Accurate Key Results Indicators, Well defined Performance
Indicators, Key Performance Indicators and ultimately the
Pertinent Risk Indicators are vital to the success of this
framework and the provision of comfort to the board that things
are working well.
63. Conduct Risk
Risk Framework
63
Once your risk identification process is completed then you
should be able to provide a clear picture of the …
As well as demonstrate that the
key governance is effective and
controls the firm with a positive
and workable culture firmly embedded
into the entire operation.
1.Evidence
3. Culture
2. Outcomes
Key
• Board & Committees
• Executive
Management
• Control Functions &
Oversight
• Conduct Risk
Management
64. Conduct Risk
Risk Framework
64
This will provide you with a fully workable and scalable model
that should be fully understood and trained out to your staff.
A simplistic view of your
framework could be;
Board
& Exec
Head of
Division
Head of Function
Head of Region/Division
Team, Department or
Local Manager
65. Conduct Risk
How To Establish Risk Appetite
LeeWerrell Chartered FCSI FISMM
Owner – Compliance Consultant
– Lee has been involved in risk & compliance work for; Inter-dealer
Brokers, Retail Banks, Investment Banks,
Stockbrokers, Building Societies other Distribution channels.
– Much of our business at Compliance Consultant is
conducted under NDAs as it involves remedial and corrective
work.
– Lee was appointed a Skilled Person in 2012 by the FSA.
Call us on 020 7097 1434
66. Conduct Risk
How To Establish Risk Appetite
Conduct Risk – How to Establish Risk
Appetite
Lee Werrell Chartered FCSI FISMM
Owner of Compliance Consultant
Contact me on 020 7097 1434
info@complianceconsultant.org
67. Conduct Risk
How To Establish Risk Appetite
• Why Not Buy Your
• Compliance Manual
• From Us ….
• Many Firms Already Have.
• http://bit.ly/ComplianceManualTemplate
Call us on 020 7097 1434
68. Conduct Risk
How To Establish Risk Appetite
Thank You For Your Time
Lee Werrell Chartered FCSI FISMM
Contact me on 020 7097 1434
info@complianceconsultant.org
uk.linkedin.com/in/leewerrell
facebook.com/ComplianceConsultant
@complianceconst @s166reports