INSIGHT

MetricStream

Five Key Trends in Risk Management

ability to monitor and detect key emerging risks as part of their overall risk management efforts. Organizations are taking a fresh look at their risk management processes and allocation of resources to ensure that emerging risks are effectively identified, assessed, and managed from strategic planning all the way down to day-to-day processes at all levels of the organization. Risk analytics and reporting is further strengthened to provide insights on emerging risk trends and provide real-time intelligence on them. Organizational structure for clear accountability and increased transparency Todays environment calls for greater collaboration and strong relationship between the risk committee and the business unit. The trend therefore is moving towards developing a risk governance structure that facilitates healthy environment and collaboration. This encourages free flow of information regarding any issues or concern between the business unit and the risk team. The organization has to be structured in a way that facilitates accountability i.e. not limited to only the Risk Committee. The business units are also getting aligned to derive maximum value out of the centralized risk committee. This ensures that there is clear accountability and increased transparency in the entire risk management process. Upgrading risk infrastructure and technological advancement Most financial institutes are upgrading the technology infrastructure used to manage enterprise-wide risks. Companies are migrating from their legacy systems, point applications and paper-based procedures to a web-based integrated enterprise risk management system. The technological advancement allows the CRO to streamline and strengthen the risk management function enabling it to deliver more strategic value while lowering its costs of operation. Expected benefits are better enterprisewide visibility, a transparent and collaborative environment and data-driven decision making. Solution and tools available today provide a reliable means to monitor access controls, observe the closed-loop processes and analyze important data and key risks.

Gaurav Kapoor Chief Operating Officer, MetricStream

The Chief Risk Officer (CRO) and the Risk management team have a clear mandate become more effective in managing risk and add value by being more proactive to the overall risk approach. The Risk management group, today needs to address the growing needs of global organizations and meet the heightened expectations of investors and board members. Based on our engagements with several large organizations relying on MetricStream solution for managing its Operational Risk, Compliance Risk and Enterprise-wide Risk, five key trends we observe are: Federated approach to risk management This is a move away from siloed world, wherein most business units and functions within a bank are essentially working independently in total isolation with little or no collaboration happening between them. This is all changing rapidly and a lot has to do with the recent regulatory reforms. The complexities and the business challenges created by the regulations demands that different business functions are deeply integrated and collaborated in their approach to analyze aggregated data and take collective decisions. In the federated structure, enterprise risk function is aligned centrally with corporate governance and reporting but is also distributed to lines of business that facilitates ownership and accountability for risk. Real-time Risk Intelligence for rapid insight into the risk process As part of better risk governance, one trend is the need for increased and well structured risk information getting to the Board and its Risk committee. They are actively seeking comprehensive and real-time risk intelligence that provides information and analysis on key emerging risks, not just financial risk such as credit or market risk. The risk intelligence must provide comprehensive and well structured information ensuring that key risk trends are appropriately highlighted and that risk appetite is well within the defined limits. Institutions also seek more granular data to remain in competition and to better price their products and services. All this information needs to flow on a real time basis such that appropriate action may be taken on a timely basis. Monitoring and Managing Emerging Risks Emerging risks, although systemic in nature, have such significant impact on the organization that it can no longer be ignored. Financial Institutions have found that, if not proactively addressed, such risks can be devastating, not because these cannot be mitigated or managed, but because the organisation lacked a clear framework to even identify these risks. To be better prepared, most financial organizations are building their

About MetricStream MetricStream is the market leader for enterprise GRC solution with specific offerings for Managing Operational Risk, Enterprise Risk, Compliance Risk, Internal Audit, Regulatory Examinations, Loss Incidents and Risk Metrics (KRI). The solution comes pre-packaged with embedded best practices and content library.

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