This document discusses effective risk management for digital finance. It outlines the risk management process including risk identification, assurance and mitigation, and reporting. It describes the four lines of defense model for risk management. Common digital risks like business disruption, fraud, third party risks and information/cyber risks are identified along with example controls to mitigate each risk. Typical risk mitigation strategies of mitigate, transfer, avoid and accept are also mentioned.

1. Effective Risk Management for Digital Finance
MATIMBA TREVOR MABASA

2. Table of
Contents
1. MARCH 2023 – CHAT GPT
2. START WITH THE WHY & HOW
3. WHAT IS EFFECTIVE RISK MANAGEMENT?
4. THE FOUR LINES OF DEFENSE
5.THE RISK MANAGEMENT PROCESS:
5.1. RISK IDENTIFICATION
5.2. RISK ASSURANCE AND MITIGATION
5.3. RISK REPORTING
6.TYPICAL RISK MITIGATION STRATEGIES
7. COMMON DIGITAL RISKS & MITIGATION
STRATEGIES
8. QUESTIONS

3. 1. March 2023

4. 2. Start with the
why?
1. To work with
management to set
the tone for a
proactive risk
culture
2. To work with
management to
identify risks and
set risk appetites
3. To raise
awareness and
recommend
controls
4. To enable
conscious risk
taking (i.e eyes
wide open)
5. To predict and
manage predictable
disasters (disasters
we should have
seen)
6. Identifying the
normalization of
deviance (it can
also happen to us)
7. To enable the
business to achieve
its objectives
8. To recommend
controls to mitigate
risks (business and
Technology)
9. To minimise
losses and
maximise profits

5. 3. What is an effective risk
management strategy and
environment ?
1. It’s a continuous monitoring process
(Incidents,Changes,Audit,etc.)
2. Understands the industry landscape
includingcustomer needs
3. Understands the business landscape
includingassets
4. It is proactive and predictive
5. It is embeddedin all businessprocesses
6. It is proactive
7. It is data driven
8. It is customer and businessdriven
9. Everybody takes responsibility for risk
management (risk conscious andaverse)
10. It is collaborative

6. 4. The four lines of defense for effective risk management
The board of directors sets
the tone (1st Line)
Executive management
including business & IT
develops and implement the
strategy (1st Line)
Line management and 1st
line risk implements and
monitors controls
2nd Line Risk provides
guidelines and assurance
3rd Line of defense reviews
and provide assurance on
risk and controls
4th line of defense (External
Audit) provides assurance
on risks and controls

7. 5.1. Risk
identification &
Assessment
3.1.1. Incident Trending
and Analysis for
continuous monitoring
3.1.2. Change Trending
and Analysis
3.1.3. Internal &
External Audit Themes
3.1.4. Perform Business
units risk assessments
(RCSA) including:
- Establishing likelihood
and consequences
- Recommending
controls

8. 5.2. Risk
Assurance and
mitigation
3.2.1 DEVELOP AN
ASSURANCE PLAN
3.2.2. IDENTIFY AND TEST
THE CONTROL
ENVIRONMENT
3.2.3. IMPLEMENT
CONTINUOUS MONITORING
INCLUDING:
1. INCIDENT TRENDING AND
PREDICTIVE ANALYSIS
2. RISK CONTROL
ASSESSMENTS (ADHERENCE
TO GOVERNANCE
DOCUMENTS
3. AUDIT PLANS –
UPCOMING AUDITS
4. AUDIT FINDINGS REVIEW
AND TRACKING
5. CHANGE MANAGEMENT

9. 5.3. Risk
reporting
Integrate risk discussions in daily, weekly and monthly stand-ups
Risk forums within business units by Risk managers
Risk and compliance committees for Business units
Risk & compliance committees for the Group

10. 6. Typical Risk mitigation strategies
Mitigate
Transfer
Avoid
Accept

11. 7. Common Top Digital Risks & Mitigation strategies
Risk Impact Example of Controls
1. Business Disruption Risk:
• Technology Failures
• Change Controls Failures
Financial loss
Reputational Damage
• Regular maintenance
• Effective change management
processes
• Resilient systems, people and
processes i.e cloud/DR, etc.
• Capacity Planning & Monitoring
2. Fraud Risk • Real time monitoring
• Regular awareness campaigns
3. Third Party Risk • Third party reviews
• High risk for controls
4. Information & Cyber Risk • Cyber security measures (Encryption,
Multi –factor authentication,
Mimecast, honeypots, firewalls, etc.)
• Vulnerability Management
• Patch
• Web Security
5. Regulatory Compliance:
• POPIA
• AML
• Exchange Controls
• POPIA controls
• AML
• Exchange Controls

12. Common Top Digital Risks & Mitigation strategies – continued
Risk Impact Examples Controls
5. Execution/Strategic Initiatives Financial loss
Reputational Damage
Adequate and effective project
management practices
6. Competition (Blackberry,
Nokia, etc.)
• Relevant and up to date
business strategy aligned to
current and future customers
needs and demands
• Regular reviews and updates

13. Other mitigation strategies:
• Insurance Coverage: Evaluate the possibility
of obtaining insurance coverage tailored to
digital finance risks. This can help mitigate
financial losses resulting from certain
unforeseen events
• Stronger Cybersecurity measures