Risk-based supervision (RBS) assesses risks within the financial system, prioritizing resolution of the most critical risks. It is becoming the dominant regulatory approach worldwide. The RBS process identifies an individual insurer's most critical risks and evaluates risk management, financial vulnerability, and compliance through focused review. RBS is forward-looking, evaluating present and future risks to facilitate early intervention. It focuses on continuous data collection, on-site examinations, thematic reviews, increased audit/compliance reliance, and engagement between supervisors and management. The goal is continuous supervision and early corrective action.
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https://youtu.be/f3VgVOgAUoE
Credit management is the process of granting credit , setting the term its granted on, recovering this credit when its due and ensuring compliance with company credit policy.
The difference in the rate of interest that a bank charges on the amount lent and the rate it pays to the depositors is technically called spread or interest rate spread.
This spread bank has to use to meet all its overheads and interest on deposit but also provide for NPA.
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Operational Risk Management - Understanding Your Risk LandscapeEneni Oduwole
This presentation provides insights on how the proper implementation of Operational Risk Management can lead to effective risk profiling, analysis and mitigation. It introduces operational risk as a bedrock for meaningful risk management irrespective of which industry an organization plays in.
Watch full video on YouTube -
https://youtu.be/f3VgVOgAUoE
Credit management is the process of granting credit , setting the term its granted on, recovering this credit when its due and ensuring compliance with company credit policy.
The difference in the rate of interest that a bank charges on the amount lent and the rate it pays to the depositors is technically called spread or interest rate spread.
This spread bank has to use to meet all its overheads and interest on deposit but also provide for NPA.
Thank You For Watching
Subscribe to DevTech Finance
Operational Risk Management - Understanding Your Risk LandscapeEneni Oduwole
This presentation provides insights on how the proper implementation of Operational Risk Management can lead to effective risk profiling, analysis and mitigation. It introduces operational risk as a bedrock for meaningful risk management irrespective of which industry an organization plays in.
Commercial credit analysis can introduce a lot of complexities into the banking organization: additional underwriting standards, new financial data to collect and interpret, complex relationships with multiple entities and commingled incomes, additional regulatory focus, etc.
Sageworks Senior Consultant Peter Brown covers some of the basics that come with credit analysis including what data to consider, how to analyze the data, when to introduce benchmarking and automation and other topics.
MODULE 3:
Credit Risks Credit Risk Management models - Introduction, Motivation, Funtionality of good credit. Risk Management models- Review of Markowitz’s Portfolio selection theory –Credit Risk Pricing Model – Capital and Rgulation. Risk management of Credit Derivatives.
In this article how risk management in banks is an important concept, what type of risks banks faces and how they curb it through risk management model is described
Concept Of Risk Management PowerPoint presentation SlidesSlideTeam
This deck consists of total of twenty four slides. It has PPT slides highlighting important topics of Concept Of Risk Management Powerpoint Presentation Slides. This deck comprises of amazing visuals with thoroughly researched content. Each template is well crafted and designed by our PowerPoint experts. Our designers have included all the necessary PowerPoint layouts in this deck. From icons to graphs, this PPT deck has it all. The best part is that these templates are easily customizable. Just click the DOWNLOAD button shown below. Edit the colour, text, font size, add or delete the content as per the requirement. Download this deck now and engage your audience with this ready made presentation
A business combination is a transaction or other event in which a reporting entity (the acquirer) obtains control of one or more businesses (the acquiree).
Liquidity Risk is normally a crucial issue in a banking crisis, however, during the 2007-2010 period, Liquidity has not been as difficult for us as we may have thought. There are many reasons for this, but number one is the fact that today’s community bankers simply have a better understanding of the various techniques for raising both retail deposits and wholesale funds. What does make this crisis a bit different is the relative pricing efficiencies in the wholesale or non-core funding arena these days and our session will focus on how bankers can avoid those difficult examiner discussions about the use of FHLB Advances and Brokered Deposits. It’s all about process and we will provide guidance on what needs to be in your ALCO Policy as it relates to wholesale funding. We will also explore the April 2010 Liquidity and Funds Management Guidance to ensure your bank is up to speed on those requirements. Finally, we will provide specific guidance on both Ratio Analysis and creating your Contingency Funding Plan and will review a sample CFP.
This presentation provides complete study ofcredit risk management,how it was performed in yester years ,how it is taken care nowadays and what is the road ahead in future
Commercial credit analysis can introduce a lot of complexities into the banking organization: additional underwriting standards, new financial data to collect and interpret, complex relationships with multiple entities and commingled incomes, additional regulatory focus, etc.
Sageworks Senior Consultant Peter Brown covers some of the basics that come with credit analysis including what data to consider, how to analyze the data, when to introduce benchmarking and automation and other topics.
MODULE 3:
Credit Risks Credit Risk Management models - Introduction, Motivation, Funtionality of good credit. Risk Management models- Review of Markowitz’s Portfolio selection theory –Credit Risk Pricing Model – Capital and Rgulation. Risk management of Credit Derivatives.
In this article how risk management in banks is an important concept, what type of risks banks faces and how they curb it through risk management model is described
Concept Of Risk Management PowerPoint presentation SlidesSlideTeam
This deck consists of total of twenty four slides. It has PPT slides highlighting important topics of Concept Of Risk Management Powerpoint Presentation Slides. This deck comprises of amazing visuals with thoroughly researched content. Each template is well crafted and designed by our PowerPoint experts. Our designers have included all the necessary PowerPoint layouts in this deck. From icons to graphs, this PPT deck has it all. The best part is that these templates are easily customizable. Just click the DOWNLOAD button shown below. Edit the colour, text, font size, add or delete the content as per the requirement. Download this deck now and engage your audience with this ready made presentation
A business combination is a transaction or other event in which a reporting entity (the acquirer) obtains control of one or more businesses (the acquiree).
Liquidity Risk is normally a crucial issue in a banking crisis, however, during the 2007-2010 period, Liquidity has not been as difficult for us as we may have thought. There are many reasons for this, but number one is the fact that today’s community bankers simply have a better understanding of the various techniques for raising both retail deposits and wholesale funds. What does make this crisis a bit different is the relative pricing efficiencies in the wholesale or non-core funding arena these days and our session will focus on how bankers can avoid those difficult examiner discussions about the use of FHLB Advances and Brokered Deposits. It’s all about process and we will provide guidance on what needs to be in your ALCO Policy as it relates to wholesale funding. We will also explore the April 2010 Liquidity and Funds Management Guidance to ensure your bank is up to speed on those requirements. Finally, we will provide specific guidance on both Ratio Analysis and creating your Contingency Funding Plan and will review a sample CFP.
This presentation provides complete study ofcredit risk management,how it was performed in yester years ,how it is taken care nowadays and what is the road ahead in future
Financial regulators have issued an advisory to remind institutions to remind institutions of supervisory expectations regarding sound practices for managing interest rate risk. BankRisk from TriNovus can assisit financial institutions with this requirement. www.trinovus.com
Five lines of assurance a new paradigm in internal audit & ermDr. Zar Rdj
• Boards are provided with a tangible vehicle to demonstrate they are actively overseeing the company’s “risk appetite framework” (“RAF”)
• The process is designed to fully integrate with strategic planning, new product/service initiatives, and M&A activities.
• The process provides a clear response to emerging expectations like the UK Governance Code, Canadian Securities Administrators, SEC, FSB, credit agencies, institutional investors and TSB.
• The main role of internal audit is to report on the effectiveness of the risk management processes and the consolidated report on residual risk status the board receives from the CEO or his/her designate and to help the company build and maintain robust risk management processes
• Boards are provided with a tangible vehicle to demonstrate they are actively overseeing the company’s “risk appetite framework” (“RAF”)
• The process is designed to fully integrate with strategic planning, new product/service initiatives, and M&A activities.
• The process provides a clear response to emerging expectations like the UK Governance Code, Canadian Securities Administrators, SEC, FSB, credit agencies, institutional investors and TSB.
• The main role of internal audit is to report on the effectiveness of the risk management processes and the consolidated report on residual risk status the board receives from the CEO or his/her designate and to help the company build and maintain robust risk management processes.
The effect of risk based audit approach on the implementation of internal co...inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
Decision Of Acceptance Or Rejection Of Assignment Auditing: A Test Of The Effects Of Client's Business Risk, Risk Audit, Risk Business Auditor And Adaptation To Risk
Financial Factors, Qualitative Factors and Investment PracticesDipesh Pandey
Qualitative Factors, Models of Project Appraisal, Analytic Hierarchy Process, Strategic Index Method, Capital Investment Decisions, Problems of Capital Rationing, Working Capital Management, Investment Practices of Insurance Companies.
Outsourcing Strategy Risks Outsourcing strategy is the process of .pdfaparnaagenciestvm
Outsourcing Strategy Risks
Outsourcing strategy is the process of determining whether or not to outsource and, if so, what
to outsource.
Outsourcing Selection Risks
Outsourcing selection is the process of finding and evaluating potential outsourcing partners.
Outsourcing Implementation Risks
Outsourcing implementation is where the relationship between outsourcing partners is defined
and established.
Outsourcing Management Risks
Outsourcing management is the monitoring and evolution of the ongoing relationship.
Future Trends in Outsourcing
The Supply Chain Consortium will examine more of the risks of outsourcing within specific
levels of the supply chain in the future. Already, the consortium has administered surveys to its
member companies on the outsourcing of transportation and distribution center (DC) operations.
Among the findings:
The use of service providers to perform operational functions presents various risks to financial
institutions. Some risks are inherent to the outsourced activity itself, whereas others are
introduced with the involvement of a service provider. If not managed effectively, the use of
service providers may expose financial institutions to risks that can result in regulatory action,
financial loss, litigation, and loss of reputation. Financial institutions should consider the
following risks before entering into and while managing outsourcing arrangements.
• Compliance risks arise when the services, products, or activities of a service provider fail to
comply with applicable U.S. laws and regulations.
• Concentration risks arise when outsourced services or products are provided by a limited
number of service providers or are concentrated in limited geographic locations.
• Reputational risks arise when actions or poor performance of a service provider causes the
public to form a negative opinion about a financial institution.
Country risks arise when a financial institution engages a foreign-based service provider,
exposing the institution to possible economic, social, and political conditions and events from the
country where the provider is located.
• Operational risks arise when a service provider exposes a financial institution to losses due to
inadequate or failed internal processes or systems or from external events and human error.
• Legal risks arise when a service provider exposes a financial institution to legal expenses and
possible lawsuits.
who should be held liable for any breaches that occur
The use of service providers does not relieve a financial institution\'s board of directors and
senior management of their responsibility to ensure that outsourced activities are conducted in a
safe-and-sound manner and in compliance with applicable laws and regulations. Policies
governing the use of service providers should be established and approved by the board of
directors, or an executive committee of the board. These policies should establish a service
provider risk management program that addresses risk a.
2. Risk-Based Supervision (RBS) is a comprehensive, formally
structured system that assesses risks within the financial system,
giving priority to the resolution of those risks. It is gradually
becoming the dominant approach to regulatory supervision of
financial institutions around the world.
The risk based supervision process (‘RBS’) is designed to work as
a structured process that identifies the most critical risks faced by
an individual insurer and systemic risks in the insurance system.
The RBS process also covers assessment of an individual insurer’s
management of those risks along with its financial vulnerability to
potential adverse experiences through a focused review by the
supervisor.
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3. The RBS process is forward looking with a focus
on evaluating
both present and future risks,
identifying incipient problems and
facilitating prompt intervention/ early corrective
action moves.
It is a departure from the earlier compliance
focused and transaction based approach called
Traditional Silo risk approach.
Background Cont;
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4. 1. Continuous collection of financial and
non-financial data from insurers with a
view to enable the regulator to
independently perform analysis of raw
data through off-site surveillance
2. Inclusive and regular onsite examination
focused on evaluating the risk and control
environment within the insurer. The inclusive
examination process is designed to enable the
supervisor to form an objective view on the
probability of failure and impact of failure
based on the existing control framework of the
insurer.
3. Thematic and targeted reviews by the
supervisor with a view to evaluate, through
use of specialists, the impact of systemic
risks on the insurer and the manner in
which the insurer is addressing potential
high-risk areas.
4. Increased reliance on the insurer’s
audit and compliance functions to
provide transactional assurance to the
supervisor and enable allocation of
supervisory resources to high risk areas
5. Use of capital add-ons1 based on the
assessment of probability and impact of
failure to encourage insurers to
strengthen their control environment
Increased engagement between the
supervisor and the senior management
of the insurer with a view to ensure good
corporate governance, transparency and
accuracy of information used by senior
management for decision making.
To achieve its objective of continuous supervision and early corrective
action, the risk based supervision process focuses on the following
aspects
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5. The risk based supervision process focuses heavily on off-site surveillance. It is, extremely data intensive
and it is envisaged that Insurers will be able to provide data in a seamless and automated manner to the
supervisor on a regular basis. The risk based supervision process are
Risk Based Supervision Process
Risk Based Supervision Process
1
Data
gathering
and
analysis
2
Risk and
control,
capital and
compliance
assessment
3
Assessment
of
probability
of failure
and impact
assessment
4
Supervisory
stance and
rating
5
Action
plan and
capital
add-on
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6. Data Gathering and Analysis
Insurers are expected to provide
approximately 25,000 data points
through regulatory returns at
multiple frequencies. The
requirements are expected to
change dynamically based on
emerging risks in the industry.
Data collected by the supervisor
covers both qualitative and
quantitative data and is broadly
expected to cover the following
aspects:
- Credit risk
- Market risk
- Operational risk
- Liquidity risk
-Information technology Risk
-Insurance Risk
-Internal audit Compliance
-Legal and Regulatory Risk
-Strategic Risk (Management &
Board)
The supervisor would identify
inherent risks applicable to all
Insurers. The data collected will
form the basis for computing risk
indicators against the inherent risks
identified. Accordingly, the accuracy,
completeness and timeliness of data
are critical for the determination of
rating by the supervisor.
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7. Risk and Control, Capital and Compliance
Assessment
Assessment of existing controls for
inherent risks, available capital,
ability to raise capital, earnings
growth to augment capital and
compliance form the basis for
determining the probability of
failure. It is important for the
insurer to demonstrate to the
supervisor that controls are in place
to address inherent risks. The ability
of the insurer to demonstrate that
inherent risks are controlled
appropriately as well as the ability to
demonstrate an appropriate scoring
on the risk indicators will have an
impact on the determination of the
probability of failure.
Further, qualitative aspects will be
assessed by the extent to which the
compliance and internal audit
functions provide assurance to the
supervisory staff. It is expected that
as the supervisory focus moves away
from transaction and compliance
testing, the insurer will augment its
transaction testing through
concurrent/ internal audit and
compliance testing. Availability of
excess capital judged by existing
excess capital, earnings growth and
access to capital raising sources
forms a key part of the decision on
probability of failure.
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8. Assessment of Probability of Failure
and Impact Assessment
The supervisor will determine the probability of
failure based on the residual risk and the
available capital to absorb the risk. Impact of
failure varies for systemically important and
non-systemically important institutions. While
probability of failure and impact of failure are
assessed separately, it is important for an
individual insurer to strive towards reducing the
probability of failure.
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9. Supervisory Stance and Rating
The supervisor will determine
the rating based on the risk the
insurer poses to the supervisory
objectives of financial stability,
protection of policyholders’
interests and stakeholders
protection. The supervisory
rating is therefore a function of
the probability of failure and
the impact that the failure can
cause to the financial system.
Apart from objective
parameters, thematic reviews,
the views of the supervisory
relationship
manager assigned to the
insurer and the ability of the
insurer to demonstrate good
governance plays an important
role in determining the
supervisory rating. The
supervisory stance resulting
from the rating may lead to
baseline (normal) monitoring,
closer monitoring or active
oversight. The insurer should
aspire to remain within the
baseline (normal) monitoring
stance.
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10. Action plan and capital add-on
Based on the supervisory rating, the insurer and the
supervisor are expected to agree on an action plan. The
objective of the action plan is largely expected to focus
around reducing the probability of failure. However,
where insurers are systemically important, the focus is
also expected to be on managing potential contagion.
Where the probability of failure is higher or where the
impact to the financial system is high especially in case
of systemically important institutions, the supervisor
may require additional capital to be kept aside.
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11. Reference
Risk Based Supervision – Financial service commission - www.fsc.gov.bb/index.php/43-in-
focus/144-rbs-in-focus
Navigating the risk based supervision process - Deloitte - www.deloitte.com/in.
Inherent Risk categories – NAICOM – Risk-Based Supervision Framework for Insurers in
Nigeria.
Systematically important Financial Institution - Wikipedia
https://en.wikipedia.org/wiki/Systemically_important_financial_institutionsystemically important,
Capital Add-On - Implementing Measures on Solvency II: www.ceiops.eu –CEIOPS
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