strategic risk management03

7/31/2019 Strategic Risk Management03

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PresentationonStrategic Risk Management

Compliance Risk ManagementManaging other Risks


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Meet Our Group MembersName Roll No.

Zubaidul Islam 15438

Himal Paul 15473

Farahad Uddin Chy 15472

Anik Chowdhury 15456

Md. Murad Chowdhury 15491

Abu Abdullah Zia Uddin Hossain 15461

Md. Sorwar Jahan 15463

Sharif Ahmed 15465

Md. Ariful Islam 15410

Sheikh Farid 15402

Kamal Mahtab 15446


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Strategic RiskStrategic risk is the current and prospective impacton earnings or capital arising from adverse

business decisions, improper implementation of decisions, or lack of responsiveness to industry changes.

Sources of Strategic RiskExternal Risk FactorsInternal Risk Factors


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External Risk Factors

CompetitionChange of Target Customers

Technological ChangesEconomic FactorsRegulations


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Internal Risk FactorOrganizational Structure Work Process and Procedures

PersonnelInformationTechnology


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Strategic Plan A strategic plan is a document reflecting the missionand strategic goals of a bank, generally for period of atleast five years. A good strategic plan must be

ClearConsistent with goals

Flexible Adjustable to changes in the environment


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Strategic plan should contain:Strategic plan should contain at least the following: Analysis of external environmentSWOT AnalysisStrategic goals and objectivesDescription of Risk Management systemMission, goals and operating plansProjection of Financial Statements


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Board OversightThe board is responsible for the strategic direction of the bank documented in strategic plan setting out inclear terms objectives and goals in all major areas of thebanks business.The board should knowledgeable about the banks market, economic and competitive conditions andensure that the strategic plan is implemented effectively and reviewed at least annually.


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Senior Management OversightManagement of the bank is responsible forimplementing the banks approved strategic andbusiness plans.Senior management must translate the strategic goalsinto attainable operational goals.The plan and objectives should be compatible with thenature, size and complexity of the bank as well as themarket of the banks operations.


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Policies, Procedures and LimitsStrategic risk management should be based onapproved Strategic Risk Management Policy. Thepolicy should contain at least the following:

Definition of strategic risk;Sources of strategic risk;Risk mitigation factors to strategic risk;

Manner of managing strategic risk;Banks accepted tolerance for strategic risk exposure.


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Identification, Measurement and Monitoring

of strategic riskIdentification and measurement of strategic risk canbe determined through strategic planning, thepreparatory process of a strategic plan and thereasonableness of a strategic plan.Management should fully participate and carefully decide on the basis of information that business andstrategic plans are feasible and appropriate.The goals of the strategic plan should be consistent with the strategic plan and overall objective of thebank as well as allocation of budget.


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Identification, Measurement and Monitoring

of strategic riskFor effective measurement and monitoring processeach business unit must consider the following factors:

Contents of the reports submitted to inform decisionsat higher level;Frequency of the reports;Presentation styles should facilitateunderstandability;The report should highlight material risks andstrategies mounted to counter them.


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Management Information System (MIS)For effective monitoring of strategic risk, a robustmanagement information system (MIS) should be inplace. MIS supports the implementation of thestrategic plan, through the following:

Provides, collects and process data;Reduces operating cost;Enhances communication among staff; andEnable the bank to identify and measures its strategic risk ona timely manner and generate data and reports for use by theboard and management.


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Strategic Risk ControlThe board and senior management must carefully formulate a strategic plan for all new products.In order to fulfill the strategic plan a bank should:

Review performance of senior management against set goalsat least annually.Establish a policy or plan for management succession.Monitor and control performance of outsourcingarrangements.Set compensation guideline and methods for managementand employees.Set a training plan adequately budget for training.


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Compliance RiskManagement


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IntroductionDefinitions Actions for mitigating compliance risk

Common Sources of compliance risk


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Board Oversight Defining the compliance risk mgtApproving a compliance risk mgt policy

Establishing a mgt structurePeriodical review of the policy


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Senior mgt OversightImplementing the compliance risk mgt systemapproved by the boardEstablishment of an effective organizational structureRegular contact with banks compliance staff andlawyersEnsuring employees involvement in protecting banks reputationEnsuring devotion of sufficient human & technicalresourcesEnsuring ongoing compliance training


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Policies, Procedures and Limits The policy must contain:

Definitions

ObjectivesProcedures Authorities , responsibilities & information flowsClear statement


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Procedures for compliance riska. Definition of legal documentsb. Definition of standard proceduresc. Standardized contractsd. Legal due diligencee. Documentation standardsf. Definition of major mitigating actions

g. Clear documentation Standardsh. Documentation standards by central banki. Safeguarding of legal documents j. Regular compliance checks


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Identification, measurement &monitoring

Self assessment

Risk indicatorsRisk mapping


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MISPlace-timely manner-usable by board &management-appropriate & accurate- complexity

& diversity


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Internal controls Verifying Assessing

Corrective actions Appropriate scope and frequency Monitoring

Analyzing


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Managing OtherRisks


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Reputation Risk


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Reputation Risk Management(Effective Strategies)

1. Managements Anticipation 2. Self-policies3. Legal Restrictions4. Leadership Role

5. Privacy Issues


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Money Laundering Risk


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Money Laundering Risk Management

(Effective Strategies) 1. Managements Understanding 2. Managements Corrective Actions 3. Qualified ML Compliance Officer4. ML Compliance Program5. Training & Necessary Resources6. Customer Identification Process

7. Control System8. Final Reporting of Controlling System


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