Wednesday, September 17, 2014

Bank Directors May Find Themselves With a Heightened Standard of Care

To What Extent Should Regulators Dictate How Bank Boards Oversee Risk?

Author: David Schwartz
A recent address by Federal Reserve Governor Daniel Tarullo has raised the specter of expanded fiduciary duties for bank directors.  Referencing a recent academic paper proposing a simple negligence standard for expanded board oversight responsibility for risk-taking by systemically important financial institutions, Mr. Tarullo discussed how the nature of finance and financial regulation affects corporate governance and why, in turn, special corporate governance measures are needed as part of an effective prudential regulatory system.
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Thursday, May 30, 2013

Is It Time to Rethink the Nature and Management of Financial Risks?

Author: David Schwartz
For the most part, regulators and policy makers around the globe have "bought in" to the global regulatory reform agenda brought about by the financial crisis. But, there are differences of opinion on whether the reforms that are underway are up to the task of enhancing the resilience and robustness of the global financial system. Mr. Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, raises some interesting and serious questions about our understanding of global financial risk, and some of the assumptions underlying our reform efforts. In his May 28, 2013 speech before the Hong Kong Monetary Authority-Global Association of Risk Professionals, Mr. Chan raised thoughtful questions, the answers to which would have fundamental relevance to the nature and shape of the global financial system going forward.
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Wednesday, August 29, 2012

Is Your Risk Strategy a True Team Effort?

Author: David Schwartz
The real question today is whether management and the board have the right governance processes in place to drive the critical business activities—to manage risk and calibrate strategy in a coordinated way.
As companies move beyond managing financial crisis issues, they are turning to a more holistic look at their firms' governance activities.  KPMG recently conducted a study that finds that even with risk management, contingency planning, financial reporting and controls, compliance, internal audit, strategic planning and execution, and board oversight all in place, most respondents were not satisfied that these governance activities are appropriately focused on the greatest risks to their company’s reputation and brand.  According to the KPMG survey, coordination and integration of these functions are key to adding real value to dealing with risk hotspots.
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Tags: Risk Management

Saturday, July 7, 2012

Risk Management - High Level, but Low Tech

Author: David Schwartz

According to a June survey conducted by KPMG LLP, enterprise risk management processes of many major financial services firms are surprisingly manual - perhaps dangerously so.  The survey results are somewhat unexpected given that the financial services industry is one of the most technologically sophisticated, complex, and heavily regulated industries there is.  Of the financial firms responding to the survey, 47% relied primarily on manual processes across their organizations to manage enterprise risk and compliance.

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