Smart Risk Management Solution | Risk Management Compliance

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THE 1ST LINE RISK MANAGEMENT
Risk management compliance
Lessons Learned from the 1st Line Risk Control
Professionals Deep Dive
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INTRODUCTION
Intelligence for Risk Control Professionals
(1LoD)m and our good friends hosted an event
earlier this year to share observations specific
to the 1st line of defense. Here are my key
findings from the event and the report that
followed.
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RISK MANAGEMENT STRATEGIES
Risk management is a vital strategy for every
organization and should be regarded as an equal
partner for all proactive aspects of the business.
Most regulators and banks are already taking a
proactive stance surrounding the assessment of
risk and creating mitigation strategies in
response to the potential implications of a
breach.
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Operational Risk Management
KEY TAKEAWAYS
The first line of defense is more than an admin
and evidencing function its a critical
component of operational risk management Needs to
be overhauled Nearly half (47) of bankers
surveyed feel the 1st line needs to be overhauled
to be inclusive of assessing non-financial
risk 3-lines model Organizational challenges and
inadequate bank collaboration reduce the
effectiveness of the 3-lines model
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OVERHAULING THE RCSA
Attendees pointed out numerous shortfalls in the
current instance of the RCSA. Too many risks were
not recorded, and a full revision was suggested
by many. Its a delicate subject given that
things have been done this way for so long.
Change is hard for most organizations. But not
everyone supports the move away from an episodic
risk evaluation toward a combination of annual,
daily, hourly, and on- demand assessments of risk
and control effectiveness.
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THE TECHNOLOGY GAP
smarter risk management solution
Less than half of the attendees believed there to
be any automation in their controls. A desire for
better data analytics and enhanced data quality
were common themes. One concept that emerged from
the discussion is a shared need to have some
language or documentation as justification for
the investments in technology. Requesting a
budget for new tech is only one side of the
equation The sheer volume and level of noise,
particularly for messy, rich data like
e-Communications, is exacerbating the challenges
of implementing a smarter risk management
solution.
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CONCLUSION
More Work to Be Done
Fundamentally, things need to change across the
industry. When it comes to developing and
applying a structured approach to 1st line
efforts, 25 of financial firms still have this
in progress, over half of firms surveyed only
have a partial/incomplete assessment of the need,
and 60 of firms admit to being unable to solve
1st line problems due to a lack of clearly
defined risk and control responsibilities.
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