Expert Selwyn Blair-Ford presented this growing collaboration and dependency between the two functions during a speech at the RiskMinds Risk & Regulation Forum in Barcelona
Wolters Kluwer Financial Services today highlighted the increased collaboration of financial institutions' risk and prudential regulation areas to reduce risk and optimize performance while meeting regulatory requirements. Expert Selwyn Blair-Ford, head of global regulatory policy at Wolters Kluwer Financial Services, presented this growing collaboration and dependency between the two functions during a speech at the RiskMinds Risk & Regulation Forum held on September 23-25, 2014 in Barcelona. During his presentation, Blair-Ford outlined four key steps to achieving equilibrium between risk and regulation:
- Have a single reconciled source of information - A standardized approach to data management across functions can create faster and better quality data, which can be reused for multiple purposes, helping to address regulatory requirements and yielding significant benefits at the operational level.
- Use a common internally understood language - Along with a standardized data set, setting common vocabularies across different business operations can enable organizations to break down silos created by multiple geographies, functionalities and asset classes.
- Verify that each function recognizes the same risk events and issues - Where this does not occur, firms should understand and agree on why this cannot be accomplished.
- Present information to key decision makers in a controlled and concise manner - Granular, reliable and accurate risk information must be reported internally in an organized and controlled manner, in the form most easily understood by those decision makers.
Selwyn Blair-Ford commented, "Regulators now require more detailed qualitative information and expect to see evidence of effective risk management processes. This requires firms to be able to express their risk appetite, demonstrate that the board is responsible for setting it and that the firm is being managed appropriately within those risk parameters. As there are now many prudential regulatory calculations that require risk expertise from the departments of finance, treasury, risk, credit and operational risk, it is becoming increasingly essential that risk and compliance work hand in hand to effectively manage the organization's risk, report on it quickly and in detail to senior management and regulators, while optimizing business performance."
Regulation standards such as Basel III and Dodd-Frank Act require financial institutions to perform multiple risk calculations and modeling techniques such as VaR, expected shortfall, loss given default, exposure at default and CVA, in order to accurately report on the business' capital, liquidity, counterparty, credit and market risk to regulatory bodies. Risk expertise is also required to meet stress testing and reverse stress testing requirements outlined by regulators.
To find out how Wolters Kluwer Financial Services' Risk Management and Regulatory Reporting solutions can help, go to http://www.wolterskluwerfs.com/compliance/home.aspx
About Wolters Kluwer Financial Services
Wolters Kluwer Financial Services provides more than 15,000 customers worldwide with risk management, compliance, finance and audit solutions that help them successfully navigate regulatory complexity, optimize risk and financial performance, and manage data to support critical decisions. With more than 30 offices in 20 countries, our prominent brands include: AppOne® , ARC Logics® , AuthenticWeb™ , Bankers Systems® , Capital Changes , CASH Suite™ , FRSGlobal , FinArch , GainsKeeper® , NILS® , TeamMate® , Uniform Forms™ , VMP® Mortgage Solutions and Wiz ® . Wolters Kluwer Financial Services is part of Wolters Kluwer , which had 2013 annual revenues of €3.6 billion ($4.7 billion), employs 19,000 employees worldwide, and maintains operations in over 40 countries across Europe, North America, Asia Pacific, and Latin America. Wolters Kluwer is headquartered in Alphen aan den Rijn, the Netherlands. Its shares are quoted on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices.