25 HќќѠіђџȱ юћјђџ Ѣћђ 2014 &RQWLQXHG RQ SDJH ȱȬǯȱ ȱȱȱ work is documented in functional risk assessments on technologies, vendors, business operations, regulations, loan portfolios and products. ȱ ȱȱ ȱȱȱ Ĝ¢ȱȱȱȱȱ operations and risk governance processes. The end result is a holistic, enterprise-wide view of all threats. ȱȱȱȱ ȱ simply as a compliance requirement. Regulators increasingly hold that a well-run bank needs to be aware of all threats, within reason, and must have in place the tools, training and repeatable processes to measure and control these predictable threats. Ĵȱ ȱȱ A well-structured enterprisewide risk management program will achieve an optimal balance among the three core elements of risk management: governance, cost and operations. While tactical imbalances may occur at some point in time, the institution must overall strike a balance among these elements. In most cases, the institution will be able to achieve balance with careful management oversight and focus on ȱȂȱěǯ Operations: As the institution works toward achieving its growth strategy, it makes sense to implement risk management across multiple product groups, departments and divisions. The operational teams help by assessing risk in their areas that are critical to the governance process. Cost: ȱȱęȱȱ has developed a growth strategy, it needs to manage the threats that pose a risk to that strategy. An institution must be able to manage the costs associated with mitigating risks and, equally important, must not overspend on threats that have low likelihood or impact. Costs associated with the risk management program must be scaled to the threat and adjusted annually. Governance: Proper governance will ensure that the institution can ě¢ȱǰȱȱȱ- mediate risk where necessary to keep growth-strategy elements on track and to keep the institution agile. In order to have good governance procedures overseeing all risk management activities, an institution should: % ȱȱȱĴȱȱ strengthen an existing one; % ȱȱȱȱǻ ȱ or without the title) of chief ȱĜȱǻ ǼDzȱȱȱ institutions, this position could be ĴȬDz % Involve the board of directors actively in overseeing risk management, in ensuring that the risk management program is properly funded and in monitoring management’s activities around risk. ȱ ęȱȱ When an institution applies an enterprise-wide approach to risk management, many elements will snap into focus. There will be a clear picture of how business development strategy can align with the operational, cost and governance t CJMMJPO PG FRVJUZ JOWFTUNFOUT QFSNBOFOU MPBOT t EFWFMPQNFOUT TVQQPSUFE TFSWJOH QFPQMF t ZFBST PG TUFMMBS FYFDVUJPO t /P GPSFDMPTVSFT t PO UJNF SFQPSUJOH UP JOWFTUPST t TVDDFTT JO EFMJWFSJOH UBSHFU *33 UP JOWFTUPST " GVMM TFSWJDF DPNNVOJUZ EFWFMPQNFOU öOBODF JOTUJUVUJPO TVQQPSUJOH IFBMUIZ WJCSBOU BOE TVTUBJOBCMF DPNNVOJUJFT XXX DBQGVOE OFU '03 (-$' CEO Mark McDaniel, proud “Entrepreneur of the Year” award recipient in 2004
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