regulatory - Blog - Global Risk Community2024-03-29T06:26:13Zhttps://globalriskcommunity.com/profiles/blogs/feed/tag/regulatoryRole of Executive Management to Mitigate Regulatory Compliance Riskshttps://globalriskcommunity.com/profiles/blogs/role-of-executive-management-to-mitigate-regulatory-compliance-ri2023-06-28T07:40:00.000Z2023-06-28T07:40:00.000ZChristine Thomashttps://globalriskcommunity.com/members/ChristineThomas360factors<div><p>These days, the business landscape is full of regulations, and enterprises across several sectors come across an array of regulatory compliance risks. Such risks are gained from the ever-changing environment of rules, laws, and industry benchmarks covering business operations. Violations to comply with these demands can appear in noticeable financial penalties, image harm, and even legal outcomes.</p>
<p>Executive management is primarily accountable for reducing risks associated with regulatory compliance. The executive management team, which includes upper management like CEOs, CFOs, and other top executives, is crucial in guaranteeing their companies follow the appropriate regulations and laws with or without the assistance of <a href="https://www.360factors.com/regulatory-change-management-software/?utm_source=globalriskcommunity&utm_medium=referral&utm_campaign=product_page">regulatory management software</a>. They oversee creating a robust compliance framework, implementing efficient rules and processes, and promoting compliance across the entire company.</p>
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<p>The following article will examine how senior management could mitigate the risks associated with regulatory compliance. To manage the complicated regulatory landscape and protect their firms from compliance failures, we will look at What Tactics Executive Managers Can Use to Lessen the <a href="https://www.360factors.com/regulatory-change-management-software/?utm_source=globalriskcommunity&utm_medium=referral&utm_campaign=product_page" target="_blank">Regulatory Compliance Risk</a>.</p>
<p> </p>
<h2><strong>What Tactics Executive Managers Can Use to Lessen the Regulatory Compliance Risk</strong></h2>
<p>Executive management, such as chief legal, compliance, and risk officers, need to detect all the appropriate requirements to operate the quality system with the help of <a href="https://www.360factors.com/regulatory-change-management-software/?utm_source=globalriskcommunity&utm_medium=referral&utm_campaign=product_page">regulatory management software</a>. Additionally, they should also recognize those members of the management team that would consider accountable for taking care of the regulatory environment by following these three actions:</p>
<ul>
<li>Discover a violation of a required standard.</li>
<li>Fix a situation when a criterion fails, or a rule is breached.</li>
<li>Eliminate the risk of not fulfilling a specific condition.</li>
</ul>
<p>This layer of management in financial organizations must establish relevant controls based on defining, documenting, and practical implementation in their <a href="https://www.360factors.com/regulatory-change-management-software/?utm_source=globalriskcommunity&utm_medium=referral&utm_campaign=product_page">regulatory management system</a>. If done correctly, it will be able to provide the proper visibility of the state of compliance. It is essential to strengthen those accountable to attain an acceptable state of compliance.</p>
<h2><strong>RCM Software Facilitates Executive Managers for Regulatory change management.</strong></h2>
<p>Violations of compliance result in financial penalties, so managing regulatory compliance risks is mandatory for sustained success and resilience. To assist in this regard, executive managers can use Predict360 <a href="https://www.360factors.com/regulatory-change-management-software/?utm_source=globalriskcommunity&utm_medium=referral&utm_campaign=product_page">regulatory management software</a>, which Augments Regulatory Change Management with Regulatory Change Monitoring, Activity Management, and Artificial Intelligence (AI). Predict360 gives more excellent regulatory change management performance with influential features such as:</p>
<ul>
<li>Insightful Reports and Dashboards</li>
<li>Regulatory Change Monitoring</li>
<li>Regulatory Impact Analysis & Reporting</li>
</ul>
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<p> </p></div>Benefits of Integrating Regulatory Change Management Softwarehttps://globalriskcommunity.com/profiles/blogs/regulatory-change-management-software2023-01-05T16:36:10.000Z2023-01-05T16:36:10.000ZChristine Thomashttps://globalriskcommunity.com/members/ChristineThomas360factors<div><p><a href="https://www.360factors.com/regulatory-change-management-software/?utm_source=globalriskcommunity&utm_medium=referral&utm_campaign=product_page">Regulatory change management</a> (RCM) is a multi-process procedure that guarantees your organization's compliance with new regulatory changes. RCM entails receiving regulatory changes (rule additions or amendments), evaluating the consequences of those modifications on the firm's present obligations, upgrading the control activities, regulations, and procedures, and operating with the lines of business to verify those changes are socialized and implemented.</p><h2>Benefits of Implementing Regulatory Change Management Software</h2><p>For an extended period, manual techniques of trend prediction based on data analysis were utilized. Because the human brain can only perceive in particular ways, it is tough to design a Regulatory Change Management solution that is dependable and durable at all times and in all situations. The following are some of the numerous benefits of automated <a href="https://www.360factors.com/regulatory-change-management-software/?utm_source=globalriskcommunity&utm_medium=referral&utm_campaign=product_page">Regulatory Change Management software</a>:</p><ul><li>Time-saving and cost-effective</li><li>Notifies users for better collaboration</li></ul><p><a href="https://www.360factors.com/regulatory-change-management-software/?utm_source=globalriskcommunity&utm_medium=referral&utm_campaign=product_page" target="_blank"><img class="align-center" src="{{#staticFileLink}}10926052701,RESIZE_710x{{/staticFileLink}}" width="710" alt="10926052701?profile=RESIZE_710x" /></a></p><h2>Predict360 Regulatory Change Management Software</h2><p>The <a href="https://www.360factors.com/regulatory-change-management-software/?utm_source=globalriskcommunity&utm_medium=referral&utm_campaign=product_page">Predict360 Regulatory Change Management Software</a> is the ideal solution for handling regulatory changes enforced by a regulatory authority. It is a standalone web-based tool and part of a comprehensive regulatory change management and learning management system.</p><p>The software is based on AI technology, which aids in developing automated procedures. It centralizes the regulation library while maintaining a uniform taxonomy. It also automates the translation of rules and produces the applicability of the regulations process, which assists an organization in mapping and applying regulations to a region, location, or asset.</p><h3>Features</h3><ul><li>Regulatory Examinations and Results Management, as well as project plans that track and manage various concurrent activities and integrated regulatory intelligence streams.</li><li>Regulatory information, updates, and news from a range of other sources are all combined in a single stream, ensuring that you are always up to date.</li><li>Based on risk mapping, an automated preliminary evaluation of the impact of modifications and the parts of the business affected by them is performed.</li><li>Intelligent regulatory update parsing to identify changes and their application</li><li>An executive picture of regulatory concerns across the company in real-time.</li><li>Notifications to critical stakeholders regarding applicable audits, policies, regulations, and changed documents are sent automatically.</li></ul><p><a href="https://www.360factors.com/regulatory-change-management-software/?utm_source=globalriskcommunity&utm_medium=referral&utm_campaign=product_page" target="_blank"><img class="align-center" src="{{#staticFileLink}}10926053071,RESIZE_710x{{/staticFileLink}}" width="710" alt="10926053071?profile=RESIZE_710x" /></a></p><h2>About 360factors, Inc.</h2><p>360factors empowers organizations to accelerate profitability, innovation, and productivity by predicting risks and streamlining compliance. Predict360, its flagship software product, is an AI-powered Risk and Compliance Intelligence Platform that anticipates and mitigates risks while facilitating regulatory compliance. Predict360 integrates regulations and obligations, compliance management, risks and controls, audits and assessments, policies and procedures, and training in a single cloud-based SaaS platform based on artificial intelligence to provide predictive analytics and unique insights for predicting risks and streamlining compliance. 360factors is the exclusively endorsed solution provider for compliance management by the American Bankers Association (ABA). Visit <a href="http://www.360factors.com/" target="_blank">www.360factors.com</a> for more information.</p><p> </p></div>Regulatory Change Management Lessons From change Managementhttps://globalriskcommunity.com/profiles/blogs/regulatory-change-management-lessons-from-change-management2019-12-27T10:48:53.000Z2019-12-27T10:48:53.000ZChristine Thomashttps://globalriskcommunity.com/members/ChristineThomas360factors<div><p><span>While regulatory </span><span>change</span><span> </span><span>management</span><span> and enterprise change management may be different domains, there is a lot that regulatory change managers can learn from enterprise change management. The basics of both remain the same, even if regulatory change is a bit more complicated to manage. </span><span> </span></p><p></p><p><span style="font-size:14pt;">Identify the nature of change </span></p><p><span>In addition to failures related to lack of support, 70% of change projects fail because they are not managed with an adapted approach. In other words, </span><span>we</span><span> often think that all change projects are the same and can be done in the same way, but that is far from the case.</span><span> </span></p><p><span>Indeed, each change must be treated in a personalized way according to its nature and the populations impacted, because, by definition, the change is frightening and creates frustration. The evolution of mentalities and behaviors is a complex task. Indeed, any change within an organization impacts </span><span>the employees</span><span>. Without involving them, and without knowing the levers to help them accept the change, it is very difficult to make </span><span>this</span><span> project a success. </span><span> </span></p><p><span>The same goes for </span><a href="https://www.360factors.com/blog/understanding-regulatory-change-management/"><span>regulatory changes</span></a><span>. It is important to look at the human aspect of things and make sure that employees understand the changes required and why they are required.</span><span> </span></p><p></p><p><span style="font-size:14pt;">Build an action plan </span></p><p><span>Given their complexity, it is common to encounter difficulties to support change </span><span>projects.</span><span> Unfortunately, the means used are often not / or not very effective because they do not manage change as a </span><span>problem</span><span>. Regularly, no action plan is put in place, scattered actions are launched throughout the project.</span><span> </span></p><p><span>This makes the involvement of stakeholders very difficult in the long term, especially in a context of change that is often experienced as a very important transformation of everyday life. You </span><span>must</span><span> build a plan, set goals, and of course evaluate the effectiveness of the actions as you go.</span><span> </span></p><p><span>Another key point to not miss out on its change: do not limit yourself to </span><span>spreading </span><span>information. We have seen on many projects a common misconception: if people know, they will automatically change. The information is necessary, but not </span><span>enough</span><span>.</span><span> </span></p><p><span>Accompaniment makes it possible to involve the targets, to mobilize them, by making them actors of the transformation. For example, for a tool change, a user technical documentation is sometimes considered as an accompanying support</span><span>, even though it doesn’t provide much help. </span><span>It is therefore more important to privilege, questions / answers sessions, workshops, communities ... More interactive media that allow people to express themselves, participate, co-build and project into a future that makes you want.</span><span> </span></p><p><span>Finally, a major element is the implementation of a personalized approach concerning the different stakeholders. This will result from a reliable stakeholder analysis that is precise enough to release the power of influence of each identified "population". The sponsor, for example, is the one who is convinced. He then carries the project throughout his life cycle and will have enough influence to get </span><span>others to accept the future. Then you </span><span>must</span><span> be able to give the users a clear vision of what will change and not leave them in limbo.</span><span> </span></p><p><span>You cannot simply tell people about the regulatory changes that are coming up – you need to make sure they truly understand it by talking to them, providing training, and making sure you are there to answer any questions they may have.</span><span> </span></p><p></p><p><span style="font-size:14pt;">Make lasting changes to behaviors </span></p><p><span>First and foremost, it was important to change the behavior of individuals, aware that their attitude is not, or no longer, the right one. For illustration, all employees </span><span>understood</span><span> it was essential to have a complex password, however this rule was applied very little. </span><span> </span></p><p><span>Businesses also need to make sure that they make lasting changes. This doesn’t simply mean that they should tell the employees to make lasting changes, but that businesses should look at the way they handle regulatory change management and look at where they can make improvements. Some businesses may opt to change the processes that guide RCM, while others may choose to invest in a regulatory change management solution. It is important to create some sort of permanent change to the organization.</span><span> </span></p><p><span>That is one of the biggest mistakes </span><span>the </span><span>management can make – focusing on short term change. It is easy to change the way people behave for a short period of </span><span>time</span><span>. You just need to increase scrutiny and remind everyone about the changes required and they will act </span><span>differently</span><span>.</span><span> However, they will soon go back to working the way they have always worked, which is why it is important that we look at the way people behave and see how we can </span><span>change their ways permanently. Maybe the answer is in providing them with the right tools, maybe we need to introduce better controls, or maybe management itself needs to take a more active role in the change management process.</span><span> </span></p></div>Improving Regulatory Change Management in 3 Stepshttps://globalriskcommunity.com/profiles/blogs/improving-regulatory-change-management-in-3-steps2019-10-30T14:16:31.000Z2019-10-30T14:16:31.000ZChristine Thomashttps://globalriskcommunity.com/members/ChristineThomas360factors<div><p><span>Managing regulatory change is a major headache for businesses operating in industries where the regulatory framework fluctuates. The problem is that the regulations define what the business can and cannot do</span><span>, and when they change, the business must change how it operates. This makes it difficult to make long-term plans and strategies, because there is always a risk that the chosen strategy may no longer be viable if the regulatory framework fluctuates. </span><span> </span></p><p><span>If your business is stuck in a similar quagmire, there’s no reason to fret. Here are 3 steps that businesses can take to improve the management of regulatory change. </span><span> </span></p><p></p><p><span style="font-size:12pt;"><strong>1 – Create a risk map </strong></span></p><p><span>Creating a risk map is an essential part of regulatory change management which is often skipped by business, and they end up paying the price later. There are many links between regulations, policies, and business processes. There may be a policy which is directly related to a regulation. When you create a risk map you </span><span>create a model of all the relationships between regulations and parts of your business.</span><span> </span></p><p><span>What is the point of this process? It makes it very easy to manage regulatory change. </span><span>Normally, whenever there is a regulatory change, the business must do an audit of its policies and processes to determine what will be affected by the regulatory change. As you can imagine, this is not an easy or quick process, and there are chances that something might be missed. It is, however, an essential process.</span><span> </span></p><p><span>When a risk map exists, they don’t have to go through everything – they already know what regulations is linked to which policies and which processes. So, if regulation 31a changes, their risk map will tell them that policies 2b and 5c were dependent on regulation 31a. It will also tell the business about the business processes affected by policies 2b and 5c.</span><span> This means that simply by knowing which regulation changed, management would know which polices and processes would be affected by the change.</span><span> While making the risk map takes some time and effort in the beginning, it significantly reduces the time and effort required whenever any regulation changes.</span><span> </span></p><p></p><p><span style="font-size:12pt;"><strong>2 – Get more updates about regulations </strong></span></p><p><span>Most regulatory experts </span><span>have to</span><span> rely on their own research to determine how the regulatory framework is changing. While they do a great job, the process can be made much better. There are many services and trade magazines which focus on regulatory changes. There are software solutions that provide the latest regulatory news and updates as well.</span><span> </span></p><p><span>Subscribing to these tools is well worth the minor cost of such services. These services ensure that you get all the relevant regulatory news your organization needs to know. Instead of having to go out and find relevant information, the relevant information itself comes over to you. This saves a lot of time and effort </span><span>and also</span><span> provides more business intelligence than would be possible otherwise. There are standalone solutions which provide these updates and many regulatory change management solutions </span><span>also have a similar service as an added feature. Make sure you ask about regulatory updates from the vendor of your regulatory change management solution.</span><span> </span></p><p></p><p><span style="font-size:12pt;"><strong>3 – Add automation to change management </strong></span></p><p><span>One of the most significant steps an organization can take is to implement a regulatory change management system. These solutions are designed to help organizations get updates about regulations </span><span>and also</span><span> implement the necessary changes. These solution</span><span>s</span><span> provide regulatory updates </span><span>and also</span><span> have a great risk map built in within them, which further reduces the time and effort required to manage regulatory changes. </span><span> </span></p><p><span>Small organization can survive with manual change management methods, but mid-sized to large enterprise </span><span>need a better approach that streamlines the process. There are regulatory change management solutions available in all shapes and sizes. There are </span><span>on-site solutions developed by legacy vendors that require millions of dollars to implement and maintain. These are usually only used in the largest multi-national organizations, because their cost is too high for any other type of business.</span><span> </span></p><p><span>Smaller businesses need not worry – they also have a wide variety of solutions to choose from.</span><span> </span><span>Smaller businesses should look at cloud solutions that have recently been released. These solutions have a significantly lower implementation cost and their maintenance is handled by the solution provider, which further simplifies the whole process.</span><span> </span></p><p><span>Businesses will always have to work with </span><a href="https://www.360factors.com/blog/understanding-regulatory-change-management/"><span>regulatory changes</span></a><span>, because governments keep changing regulations as they see fit. It is important to include a bit of flexibility and change management in </span><span>the </span><span>long-term</span><span> plans of the organization, and </span><span>to make sure that there is </span><span>a </span><span>process to manage change</span><span>. Regulatory change management is an on-going process which requires constant attention, and it is also necessary that there is a tool in place that makes the process easier for the regulatory experts within the organization. </span><span> </span></p></div>The Perils of Regulatory Change Managementhttps://globalriskcommunity.com/profiles/blogs/the-perils-of-regulatory-change-management2019-10-15T16:46:14.000Z2019-10-15T16:46:14.000ZChristine Thomashttps://globalriskcommunity.com/members/ChristineThomas360factors<div><p><span>Managing regulatory change has long been a headache for businesses in heavily regulated industries. </span><span>Managing this change requires quite an investment. The business must hire regulatory experts who can interpret the regulations and tell the business how it will need to change itself to comply with the changes. </span><span>The problem is that this process can be rather slow and is error prone because it is being handled manually.</span><span> </span></p><p></p><p><strong>The Profound Nature of Regulatory Change </strong></p><p><span>Before we get into the perils of regulatory change, it is important to first understand just how much these regulatory movements can affect businesses. Imagine you are playing </span><span>in a basketball tournament and your team is going quite well. One day the NBA representatives come to all the teams and say that they are making some rule changes. They say that they are making the quarters longer, are thinking of maybe making the ball smaller, oh and they may be eliminating point guards because they think point guards are having a negative effect on the sports. </span><span> </span></p><p><span>Imagine how much chaos this would cause. NBA teams spend years developing a squad and a strategy. They train their players for the full year where they play practice matches </span><span>so that the strategy works flawlessly. Now the teams realize that their whole strategy will need to change. What is even worst is that the investment the teams made in acquiring and training the point guards will now be wa</span><span>sted. Longer quarters mean that players will get tired more often and are also at a higher risk of injuries, which can derail the whole tournament for many teams. </span><span> </span></p><p><span>This is hard to imagine because it is easy to see that the NBA would never make a move like this. Businesses, however, </span><span>cannot be so sure. The NBA is trying to preserve the spirit of the game, and they can be slow with the changes to make sure all the team have enough time to change themselves and be ready for the new rules. The government, on the other hand, is trying to preserve the global economy. They cannot wait and let something damage the economy just to save a few businesses – they have </span><span>the economy to worry about. </span><span> </span></p><p><span>This is a major problem in heavily regulated industries. Banks and other financial institutions must deal with such regulatory changes all the time. The regulatory changes may redefine eligibility for mortgages, may change the reserves a bank needs to keep, or may make some other change which is incompatible with the current strategy of the bank. The bank must then rethink strategies and then redo the financial modeling they were using to run their business. As you can imagine, this is not an easy process, which is why businesses take regulatory change management so seriously and invest heavily in it. </span><span> </span></p><p></p><p><strong>How businesses manage change </strong></p><p><span>So how do businesses manage when there are regulatory changes? There are many steps which they take which allow them to anticipate the upcoming changes and prepare accordingly. Businesses hire regulatory experts who are dedicated to not just interpreting current regulations but also trying to see </span><span>where the regulatory framework is moving towards. </span><span>This is done by keeping a close watch on all the </span><span>people joining the regulatory authority and going through their previous work. </span><span> </span></p><p><span>In the previous few years businesses have a new tool to help them manage regulatory change – </span><a href="https://www.360factors.com/regulatory-change-management-software/"><span>regulatory change management software</span></a><span>. These software solutions have many tools that automate parts of the process and streamline collaboration across the organization. This allows the regulatory experts to quickly extract the changes present in the new regulations. These solutions also make it easier to detect the domains of the business that will be affected by regulatory changes.</span><span> </span><span>Regulatory change management </span><span>software introduces order into a chaotic process and reduces the amount of time it takes. </span><span> </span></p><p><span>Regulatory change management software was first used in the largest banks and financial institutions of the country. These software solution</span><span>s</span><span> were provided by legacy vendors and required an investment of millions of dollars. The implementation alone took months and was very expensive</span><span>,</span><span> but the large banks could afford to spend millions of dollars due to the sheer regulatory workload they had to deal with across the country. </span><span> </span></p><p><span>Things have changed now – new change management solutions are being aimed at mid to small sized banks and financial institutions. Most of these solutions operate in the cloud which significantly reduces implementation and maintenance costs. The best part of these solutions is the ease with which they can be procured while costing a fraction of legacy systems. Businesses can get a subscription to these cloud services </span><span>and can pay for a year of usage, allowing them to accomplish in a hundred thousand dollars what would have required millions of dollars until only a few years ago.</span></p></div>The Future of Regulatory Change Managementhttps://globalriskcommunity.com/profiles/blogs/the-future-of-regulatory-change-management2019-09-27T14:02:20.000Z2019-09-27T14:02:20.000ZChristine Thomashttps://globalriskcommunity.com/members/ChristineThomas360factors<div><p>We are living in times of change. The advent of information technology led the whole world around us to change, and artificial intelligence is now promising to bring even more profound changes. We are not near fully working artificial intelligence right now however we are making some very interesting progress in its direction. We may not have an artificial intelligence, but we have started successfully developing the pieces of technology which will be the prerequisites of artificial intelligence. We can expect these technologies to completely change the way we manage regulatory changes.</p><h2>The problems with manual regulatory change management</h2><p>Before we get into the changes that will occur in the future, let us look at where we stand right now and the problems we face. Currently most businesses are handling change management manually. Small businesses have a couple of people dedicated to regulatory change management, while larger organizations may have entire departments dedicated to regulatory change management. These people keep a close watch on all regulatory updates and news coming their way.</p><p>There is a lot of work to be done. These people don’t just wait for the upcoming regulations, they try to anticipate the coming changes. They look at the attitude of the government. If anyone new is being hired to lead the local regulatory agency these people will look into the previous records of the new person to try to predict the type of regulatory changes they may want.</p><p>Anticipating regulatory changes is important because a change in regulations can have profound effect on businesses. The regulations may make a business process illegal because the process is harming the economy – in such a situation the business will have to amend all future business processes and also all marketing plans to ensure that they do not commit to something that will not be possible in the future.</p><p>The process of going through the regulatory changes is itself a major pain. Not only do the regulatory experts have to manually comb through the changes, they must also then manually determine every area of the business affected by the regulatory changes. They must go through all the policies and documents to ensure that there are no violations as per the new regulations. This whole process takes a considerable amount of people and time, which means it ends up costing businesses a lot.</p><h2>The technology available now</h2><p>As we said before, we may not have artificial intelligence, but we do have many technologies that can be considered its prerequisites. <a href="https://www.360factors.com/regulatory-change-management-software/">Regulatory change management software</a> uses machine learning and natural language processing to make the whole process streamlined. There is no need to manually sift through regulations; the software can automatically detect what has changed and highlight all the changes to the regulatory experts.</p><p>That’s not all – regulatory change management software also has risk maps in them. These risk maps define what process is linked to which policy and regulation. This proves to be of immense benefit when a regulation is changed. The risk map helps the software understand how everything is linked. So if the software detects a regulatory change, it can also see what parts of the business will be affected by the regulatory changes. This makes the whole process, from detecting changes to implementing the required changes, much faster.</p><h2>Where we are headed</h2><p>We can never be a hundred percent sure about the future because there are multiple paths which can be taken, and we don’t really know which one will end up becoming reality. There is talk of creating regulations in machine language so that computers can easily understand them. However, at the same time, natural language processing technology is also getting better, which means that soon there may not be a need of creating laws in machine language as the software will be able to understand the regulations as they are written right now.</p><p>We will not be surprised if the governance and administration part of the business is fully automated in a few years. We will still need people to supervise everything, but the computers will be able to do a much better job of monitoring everything and ensuring that there are no problems throughout the organization. It is possible for a human being to forget an important requirement which can result in a compliance violation, but it isn’t really possible for computers to forget any step. This will result in processes getting automated across the organization.</p><p>We are sure that we will look back on current times and find it funny how backwards we were, because some of the technologies on the horizon have profound potential to advance not just businesses but the whole society. Even regulatory bodies are now focusing on technology that will help them audit businesses easily and automatically detect problems.</p></div>How to streamline Regulatory Change Management?https://globalriskcommunity.com/profiles/blogs/how-to-streamline-regulatory-change-management2017-12-14T14:30:00.000Z2017-12-14T14:30:00.000Zfahad_factorshttps://globalriskcommunity.com/members/fahadfactors<div><p>The Compendium of Evidence on the Effectiveness of Innovation Policy Intervention Project in the stewardship of Manchester Institute of Innovation Research (MIoIR), University of Manchester has revealed some interesting facts about Regulatory Change Management. There have always been mixed opinions about the importance of regulations in the industries and people are unable to come to a consensus. In order to get some clarity and ascertain the impact of regulations on organizations, <a href="https://www.nesta.org.uk/sites/default/files/the_impact_of_regulation_on_innovation.pdf" target="_blank">an endogenous growth approach</a>, developed by Carlin and Soskice in 2006 was employed. This approach allows for the comparison of the negative effect of compliance costs with the dynamic effect of regulations generating additional incentives for innovative activities.</p><p><img class="wp-image-3478 aligncenter align-center" src="http://www.360factors.com/wp-content/uploads/2014/04/Regulatory-Complexities.jpg" alt="How to streamline Regulatory Change Management?" /></p><h2>Regulations and Innovation</h2><p>The crux of the new approach lies in the empirical methodology that it employs. Empirical analyses, which were already known, were surveyed by employing a variety of methodological approaches, databases, and results. Through the analysis, the short term and long term impact of regulations have been revealed. The investigation has divulged that short term impacts of regulations are often negative for innovation. However, rules and regulations more than make up for their initial failings by serving as great assets in the long run. There is an added incentive of spillover benefits, which help in enhancing an organization’s structure and also drive the uptake of innovation.</p><p>Most quantitative studies done by using the empirical methodology haven’t been able to distinguish between the influences of changes in the creation of rules, their implication, and the resultant compliance of the companies. However, it has been found that the innovative culture when inculcated in the operations of regulatory bodies promotes the positive innovative impact of regulations.</p><p>Through the studies, the following proposals for more innovation-friendly and innovative targeting regulatory policies can be deduced:</p><ul><li>Optimize the frequency and timing of reviewing existing regulations.</li><li>Strengthen the focus on innovation while creating regulatory policy.</li><li>Enhance the quality of the regulatory framework that is directed at innovation.</li></ul><h2>Regulations and Economics</h2><p>The definition of regulations by OECD in 1997 states that regulation is the implementation of rules by public authorities and governmental bodies in order to influence market activity and the behavior of private actors in the economy.</p><p>In order to structure the argument for economic regulations, we distinguish between the different subcategories:</p><h2>Regulation of Competition</h2><p>The policies that are devised with the purpose of enhancing competition increase the incentives for companies to invest in innovative activities. When the competition is within a certain limit, it can have a positive effect; however, when it becomes uncontained, and imitation becomes a better option than innovation due to its lower costs, it can have a negative effect.</p><h2>Market Entry Regulations</h2><p>The regulations created for keeping a check on the entry of new businesses are very important to prevent the integrity of the industry. It is best to thwart the efforts of the inefficient entrepreneur who can do more harm to the industry than any good to its reputation. These regulations also work in favor of the already established businesses that prefer a lower level of competition and want to restrict the entry of new businessmen. However, this approach lowers the competition and diminishes the innovative performance in the market. Through an analysis, it was discovered that incumbents’ growth and patenting is positively linked with the lagged foreign firm entry. But this is only valid in technologically advanced industries. It is still required for backward industries to promote the growth of new entrants to leverage innovation via competition.</p><h2>Use of Artificial Intelligence (AI) for Handling Regulatory Change Management</h2><p>From the aforementioned analysis, we can clearly see that it is hard to figure out a standard approach for regulatory management that is beneficial to all. Using rudimentary tools and methods for <a href="http://www.360factors.com/enterprise-risk-compliance-software/" target="_blank">Governance, Risk and Compliance</a> (GRC) do not hold any value in today’s dynamic industrial landscape. It is best to utilize an AI-powered solution that can learn trends and predicts patterns and ultimately helps you in making critical decisions that are innovative and economically viable at the same time.</p><p>In order to streamline <strong>Regulatory Change Management System</strong>, you can procure Predict360’s <a href="http://www.360factors.com/regulatory-change-management-software/" target="_blank">Regulatory Change Management Software</a>. It is licensable as a standalone web-based application and can also be procured as part of an integrated regulatory change management and learning management solution.</p><p>For more information about <strong>Regulatory Change Management Software</strong> and how it can be further enhanced as part of an integrated risk and compliance management suite, visit <a href="http://www.360factors.com/regulatory-change-management-software/" target="_blank">http://www.360factors.com/</a>.</p></div>Managing Regulatory Changes and Political Risk with Enterprise Risk Management (Part 2)https://globalriskcommunity.com/profiles/blogs/managing-regulatory-changes-and-political-risk-with-enterprise2017-06-02T18:00:00.000Z2017-06-02T18:00:00.000ZSteven Minskyhttps://globalriskcommunity.com/members/StevenMinsky<div><p><strong><span class="font-size-3">Here's Why Compliance Solutions Are Inadequate for Managing Regulatory Changes</span></strong></p><p></p><p><span style="text-decoration:underline;"><a href="http://www.logicmanager.com/grc-software/compliance-management/">Regulatory compliance</a></span> is mandatory, but it’s not the end goal; it’s the minimum operating standard. For strong companies, compliance is a mere byproduct of performing well and managing uncertainty. Compliance solutions can also cause difficulties in the face of <span style="text-decoration:underline;"><a href="http://www.logicmanager.com/erm-software/2017/03/21/manage-domestic-political-risk/">domestic political risk</a></span>, which includes significant fluctuations in the regulatory environment.</p><p>The biggest differences between regulatory compliance and risk management are:</p><ol><li>Regulatory compliance has a known, black-and-white outcome (meet a set number of specific requirements).</li><li>Regulators give companies a predefined amount of time to adjust their operations, meaning there is <em>no</em> uncertainty as to when (and what) actions must be taken.</li></ol><p>The ROI of a software solution can be represented by:</p><p></p><p><a href="{{#staticFileLink}}8028259657,original{{/staticFileLink}}"><img width="750" src="{{#staticFileLink}}8028259657,original{{/staticFileLink}}" class="align-center" alt="8028259657?profile=original" /></a></p><p></p><p>However, when using compliance-specific software, this formula for return falls apart in the face of uncertainty. Software specializing in regulations like Dodd Frank or SOX is only useful when you know the regulation will not change.</p><p>Now, with regulations being rescinded, altered, and drafted in an unpredictable environment, it simply doesn’t make sense to invest in compliance-specific solutions. In order to manage domestic political risk, organizations need to be able to do the following:</p><ol><li>Thrive in an atmosphere of uncertainty by identifying <span style="text-decoration:underline;"><a href="http://www.logicmanager.com/erm-software/knowledge-center/best-practice-articles/risk-identification/">root-cause risks</a></span> and <em>creating </em>certainty;</li><li>Stay abreast of regulatory changes, adapting as policies change;</li><li>Prioritize those risks so high-impact issues can be dealt with more quickly.</li></ol><p>A risk taxonomy helps corporations reorganize their processes, policies, and requirements while automatically preserving the links back to underlying risks, controls, monitoring activities. Change management is built-into enterprise risk management systems with robust taxonomy technology. Spreadsheets, Office products, and compliance solutions simply can’t do this. They’re not designed to manage change over time, which is within the inherent definition of effective risk management.</p><p></p><p><strong><span class="font-size-3">Why is ERM the Answer to Regulatory Changes and Political Risk?</span></strong></p><p></p><p>The cost of non-compliance is far greater than monetary fines or lawsuits; violations can substantially impact a company’s reputation for years. When it comes to protecting your company’s reputation, as stated by Ben Franklin, “an ounce of prevention is worth a pound of cure.” The cost of a proactive solution is minuscule compared to the cost of sustained reputation damage.</p><p>As is becoming more and more evident as time goes on, the straightforwardness of compliance – a concrete “what” and a concrete “when” – vanishes when regulations are altered. Even in an ideal world, where line items remain constant and unchanged, regulatory risk is but one source (among hundreds) of uncertainty.</p><p>Enterprise risk management makes it possible to thrive even when the environment surrounding your business is a cloud of uncertainty. It accomplishes this by helping you answer a simple question: what’s best for the business? Different processes, products, and assets have different value-adds, and ERM is the tool that provides senior management the means of identifying connections between activities to objectively prioritize and address emerging changes.</p><p>When the “when/what” is removed (or was never present, as is the case with all risk <em>except </em>regulatory risk), what’s the priority? Compliance solutions can’t help with this; they can only ensure you’re able to provide a report to a particular regulator. That report doesn’t even mean your business is managing uncertainty, it just means you won’t be slapped with a particular penalty.</p><p><u>Determining what will deliver a healthy ROI <em>and</em> ensure compliance is the key to operating amidst significant political risk.</u> As an example, consider a bank or other financial institution: meeting FFIEC requirements for third-party management should be a mere byproduct of robust contracts and vendor due diligence.</p><p>These activities allow for uninterrupted, safe operations, and must occur even in the absence of FFIEC requirements. Enterprise risk management, by helping organizations discover both vulnerabilities and opportunities, provides an ROI far greater than the direct cost of potential penalties.</p><p></p><p><strong><em>Learn more about the </em><span style="text-decoration:underline;"><a href="http://www.logicmanager.com/erm-software/product/risk-based-process/"><em>risk-based process</em></a></span><em> and why it’s so effective at managing uncertainty. Also download our free eBook, </em><span style="text-decoration:underline;"><a href="http://www.logicmanager.com/download-ebook-risk-based-compliance/"><em>Implementing Risk-Based Compliance</em></a></span><em>, to learn more about adapting in the face of regulatory changes.</em></strong></p><p></p></div>Basel 4: The new way to play the dicehttps://globalriskcommunity.com/profiles/blogs/basel-4-the-new-way-to-play-the-dice2015-07-12T14:00:00.000Z2015-07-12T14:00:00.000ZDr Debashis Duttahttps://globalriskcommunity.com/members/DrDebashisDutta201<div><p><a href="{{#staticFileLink}}8028235682,original{{/staticFileLink}}"><img src="{{#staticFileLink}}8028235682,original{{/staticFileLink}}" width="286" class="align-full" alt="8028235682?profile=original" /></a>In next couple of years there will be sweeping changes to existing Basel III Accord what will pave way for a new game changing regime called Basel 4. In obvious intent, the new Accord will raise risk-based capital ratio, revise risk weighting and move away from too much emphasis on model-based approach. One of key measures will be leverage Ratio.</p><p></p><p>It will stay ahead of 3% ratio as a front-stop measure. Another key measure will be balancing risk sensitivity with simplicity in the new regime. The Basel Committee has already come out a consultation paper on the advantages of greater simplicity which gives the directions how to move out of current high level of complexity.</p><p></p><p>Another area is addressing complexity of risk weights by internal model which is also an important issue during financial crisis. To address the same, the Basel committee has come out with a paper on Fundamental Review of Trading Book which talks about considerable difference of risk weighting between banking book and trading book and the way forward. In respect of capital buffers, many countries like Australia and the UK are proposing to require Pillar 2 capital through CET1 capital, rather than through a combination of tier 1 and tier 2 capital.</p><p></p><p>This gives more loss absorbing capability of core capital paving the way for more financial stability. In liquidity measures, there have been enhancements by regulators in different geographies. In the UK, Prudential Regulatory Authority is proposing additional liquidity requirement from systemic point of view for Liquidity Coverage Ratio. So LCR and NSFR will be stabilised further. more in new regime. Furthermore, the Macro-prudential issues like surcharge for global systemically important banks will be an add on to the new Basel regime.</p><p></p><p>This will reduce contagion risk. This will tighten the large exposure measures for appropriate oversight. The bailing out of banks by government has been issue during and post financial crisis. There are astute possibilities to include the recovery and resolution issues in new Basel Accord. EU Bank Recovery and Resolution Directive (BRRD) and FSB guidance will have impact in new regime. Another change be more stringent risk disclosure the of the use of internal models on a bank’s regulatory capital.</p><p></p><p>This will create more transparency. In summary, the Basel 4 will address the above issue increasing stability and transparency of financial system, with sweeping changes, pre-empting chances of government bail out of banks or sovereign default.</p></div>Marcus Evans to host the Fraud Prevention for Financial Institutions Conference on August 12-13, 2015 in New York, NYhttps://globalriskcommunity.com/profiles/blogs/marcus-evans-to-host-the-fraud-prevention-for-financial2015-05-11T16:46:42.000Z2015-05-11T16:46:42.000ZMonique Filardihttps://globalriskcommunity.com/members/MoniqueFilardi<div><p><i>Fraud Prevention & Financial professionals will join together to share cutting edge strategies and techniques to manage the growing area of fraud risk</i></p><p><i> </i></p><p><b>New York, NY– April 29, 2015</b> <i>–</i> <b>marcus evans</b>, the world’s largest event management group, will host the <b>Fraud Prevention for Financial Institutions Conference</b> on August 12-13, 2015 in New York, NY. This premiere forum will provide a dynamic environment for senior practitioners to: leverage intelligence and analytics to better understand behavioral trends in customers and set personalized controls, weigh the efficacy of current prevention techniques, maintain ongoing communications with regulators and law enforcement as a component of effective continuity plans, and better grasp emerging areas of concern to thwart prospective fraudulent activities.</p><p><b>Featuring case studies from leading financial experts, including likes from:</b></p><p><b> </b></p><p><b>Kenneth Jones,</b> Head of Fraud Risk Management-Americas, UBS Wealth Management</p><p><b>Laurel Sykes,</b> SVP, Chief Risk Officer, CRCM, Montecito Bank & Trust</p><p><b>Amy Wagg,</b> Director, Fraud Strategy & Performance Management, BMO Financial Group</p><p><b>Philip Bartlett,</b> Inspector in Charge, New York Division, U.S. Postal Inspection Service</p><p><b>Clyde Langley,</b> VP- Fraud Prevention & Investigations, Charles Schwab</p><p><b> </b></p><p><b>Attending this peer-driven focused conference will enable you to:</b></p><ul><li><b>Create</b> employee value through the establishment of customer trust as a corporate standard to manifest a security-aware culture</li><li><b>Utilize</b> analytics to set new controls that better protect the financial institution and its customers from fraud</li><li><b>Formalize</b> industry standards for information sharing to promote earlier detection and accelerate investigations</li><li><b>Leverage</b> multi-sourced intelligence to verify customer activity as an early prevention/ detection methodology</li><li><b>Invest</b> in effective detection and prevention technologies now to avoid losses later</li></ul><p> </p><p><b>For more information on this conference, or to get a complete list of speakers, sessions or past attendees, check out the conference website</b> <a href="http://www.marcusevans-conferences-northamerican.com/marcusevans-conferences-event-details.asp?EventID=22113&SectorID=2&utm_source=pressrelease&utm_medium=chc712&utm_campaign=22113_#.VT6ZnNJViko"><b>here</b></a> <b>or email Monique Filardi, Marketing & PR Coordinator at</b> <a href="mailto:moniquef@marcusevansch.com">moniquef@marcusevansch.com</a></p><p><b> </b></p><p><b>About marcus evans</b></p><p><i>marcus evans conferences annually produce over 2,000 high quality events designed to provide key strategic business information, best practice and networking opportunities for senior industry decision-makers. Our global reach is utilized to attract over 30,000 speakers annually; ensuring niche focused subject matter presented directly by practitioners and a diversity of information to assist our clients in adopting best practice in all business disciplines.</i></p></div>Anatomy of a Tax Audithttps://globalriskcommunity.com/profiles/blogs/anatomy-of-a-tax-audit2014-03-22T01:00:00.000Z2014-03-22T01:00:00.000ZJames McCallumhttps://globalriskcommunity.com/members/JamesMcCallum<div><div class="separator" style="clear:both;text-align:center;"></div><div class="separator" style="clear:both;text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">Its that time of year again. April 15th looms ever larger as small businesses scramble to meet the IRS tax filing deadline. For many small businesses, tax filing is handled by a trusted accountant or business adviser. That tends to take the trauma out of this annual exercise in pain. But even with the help of a tax professional the angst of the season is always a pressing concern. </span></div><div class="separator" style="clear:both;text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"> </span></div><div class="separator" style="clear:both;text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">The enclosed infographic published by oBizMedia, displays some startling data about audit risk and its cost to small businesses. For example in 2011 over 50,000 small businesses were audited by the IRS. The IRS recovered over $30 billion in taxes as a result of auditing business returns. A considerable sum of money that small businesses once counted as profits now paid to the tax man. That can turn a good year of business into a not so good year. </span></div><div class="separator" style="clear:both;text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;"> </span></div><div class="separator" style="clear:both;text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">Its only natural that during times of economic adversity all business owners want to keep as much as they can. During these times some business owners may be a bit more aggressive in its tax strategy to minimize tax liability. It's a risk that unfortunately can come back to haunt SME's with additional tax liabilities, fines, penalties and costly litigation.</span></div><div class="separator" style="clear:both;text-align:justify;"></div><div class="separator" style="clear:both;text-align:justify;"></div><div class="separator" style="clear:both;text-align:center;"></div><div class="separator" style="clear:both;text-align:center;"><a href="http://3.bp.blogspot.com/-bCqD93SuPG8/Uy-xdnR9LGI/AAAAAAAAEvU/iGU-xBZEaQc/s1600/infographic+audit+4.png" style="margin-left:1em;margin-right:1em;"><img border="0" src="http://3.bp.blogspot.com/-bCqD93SuPG8/Uy-xdnR9LGI/AAAAAAAAEvU/iGU-xBZEaQc/s1600/infographic+audit+4.png" alt="infographic+audit+4.png" /></a></div><div class="separator" style="clear:both;text-align:left;"></div><div class="separator" style="clear:both;text-align:left;"></div><div class="separator" style="clear:both;text-align:center;"></div><div class="separator" style="clear:both;text-align:center;"></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">As the tax filing deadline approaches it is important to keep in mind the various audit risk factors certain deductions raise with the IRS. In the past the agency has published guidelines agents utilize to risk profile tax returns. Claiming these deductions heightens the risk of an audit by the IRS. It is a critical that SMEs are aware of these audit risk factors and incorporate this intelligence into its tax filing strategies. </span></div><div style="text-align:justify;"></div><div style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">Sum2 developed the IRS Audit Risk Program (IARP) to provide SME’s an audit risk assessment tool to keep the taxman away from the door. IARP outlines tax code focus areas where caution should be exercised when filing tax returns. Business owners can rest a bit more easy that audit risk is being effectively managed. Get Tax Audit Aware with IARP.</span><br /> <span style="font-family:Arial, Helvetica, sans-serif;"><br /></span></div><div><table cellspacing="0" class="tr-caption-container" style="margin-left:auto;margin-right:auto;text-align:center;"><tbody><tr><td style="text-align:center;"><a href="https://play.google.com/store/apps/details?id=com.wIARPIRSAuditRiskProgram"><img border="0" src="https://images-blogger-opensocial.googleusercontent.com/gadgets/proxy?url=http%3A%2F%2F2.bp.blogspot.com%2F-gU-6lf4m0v8%2FUyiOyv_r6zI%2FAAAAAAAAEsE%2FrrHxBo46VYI%2Fs1600%2FIARP%2BLogo%2B72%2Bx%2B32.png&container=blogger&gadget=a&rewriteMime=image%2F*" style="margin-left:auto;margin-right:auto;" alt="proxy?url=http%3A%2F%2F2.bp.blogspot.com%2F-gU-6lf4m0v8%2FUyiOyv_r6zI%2FAAAAAAAAEsE%2FrrHxBo46VYI%2Fs1600%2FIARP%2BLogo%2B72%2Bx%2B32.png&container=blogger&gadget=a&rewriteMime=image%2F*" /></a></td></tr><tr><td class="tr-caption" style="text-align:center;"><a href="https://play.google.com/store/apps/details?id=com.wIARPIRSAuditRiskProgram">Get Tax Aware</a><u> </u><br /> <span style="font-family:Arial, Helvetica, sans-serif;text-align:justify;"><br /></span> <span style="font-family:Arial, Helvetica, sans-serif;text-align:justify;">risk: tax code, tax audit, regulatory compliance, accounting, legal,</span></td></tr></tbody></table><div style="text-align:justify;"></div><div style="text-align:justify;"><div style="text-align:left;"><span style="text-align:justify;"><span style="font-family:Arial, Helvetica, sans-serif;">*Be sure to consult with your tax adviser for guidance on tax strategy and audit sensitivities specific to your business</span></span></div></div></div><div class="separator" style="clear:both;text-align:left;"></div><div class="separator" style="clear:both;text-align:center;"></div><div class="separator" style="clear:both;text-align:center;"></div><div class="separator" style="clear:both;text-align:center;"></div><div class="separator" style="clear:both;text-align:center;"></div><p></p></div>Climate-Changing Regulatory Standards Challenge Banking Industryhttps://globalriskcommunity.com/profiles/blogs/climate-changing-regulatory-standards-challenge-banking-industr-12013-08-16T21:25:07.000Z2013-08-16T21:25:07.000ZTyler Kelchhttps://globalriskcommunity.com/members/TylerKelch<div><p>Today’s banking industry must deal with an evolving regulatory landscape by developing new and innovative strategies for acquiring and optimizing capital. Banks must find a new way to raise capital, maintain a functional capital structure, and continue providing the products and services their customers demand while staying profitable. The new deadline for implementing the Basel III capital requirements makes capital management the most important issue for banks today.</p><p>Bogie Ozdemir, Vice President, Risk Models and Governance, Sun Life Financial recently spoke with the Global Financial Markets Intelligence (GFMI) about key topics to be discussed at the upcoming <a href="http://www.global-fmi.com/CASS2013_BO">GFMI 2nd Annual Capital Adequacy, Strategy And Stress Testing Conference</a>, September 30–October 2, 2013, in New York.</p><p><b>What are the key implications of Basel III for capital adequacy and capital optimization?</b></p><p><b>Bogie Ozdemir:</b> Basel III amounts to a climate change in the banking industry. It increased the capital requirements significantly — especially for certain businesses (most notably capital markets) and decreased the acceptable forms of capital. Capital has become a scarce resource under Basel III, putting significant downward pressure on ROE. In this new environment, Banks will need to change their business mixes, exit or shrink capital-heavy businesses, and adjust their operating models, while meeting income targets. During this course correction, their ROE and Income Targets will be challenged further as some rebalancing of operating models may compromise short-term income to improve ROE in future years. Subject to more onerous capital requirements under Basel III, banks will need to increase the efficiency of capital utilization and place greater emphasis on optimizing capital allocation and business mix across their operations.</p><p><b>How could banks integrate their regulatory and economic capital?</b></p><p><b>Bogie Ozdemir:</b> Regulatory capital is a fact of life and cannot be ignored. The economic view of capital also must not be ignored, as most recently seen in the J.P. Morgan case where attempt to reduce RWA consumption resulted in massive increase in economic risk and, ultimately, losses. On the insurance side, products such as variable annuities emphasize the importance of understanding economic risks that may not have been covered by regulatory capital requirements. The first order of business is to control the regulatory capital, which becomes the binding constraint for certain business. But regulatory capital and economic capital must be co-managed. I have noticed some banks using more simplistic — but not very robust — ways of managing the two, such a creating a composite metric that is a mix of economic and regulatory capital. Banks should establish a more robust optimization framework, define an objective function (such as maximizing ROE), and define explicit relationships between regulatory, economic (and its stressed version), and available capital. This framework should be a part of their capital and strategic planning process.</p><p><b>What are the best sources of funding in this scarce capital environment?</b></p><p><b>Bogie Ozdemir:</b> Contingent capital is becoming a viable source of funding undergoing concern. Junior Debt would be a source of capital under the “gone-concern” to protect deposit holders (and perhaps senior debt holders). By more carefully managing capital through ongoing and gone concern bases through an Economic Capital Framework, financial institutions can be more precise as to their required capital mix across common equity, senior debt, junior debt and hybrid instruments, and therefore minimize the average cost of capital.</p><p><b>How could you make sure stress testing results are integrated in capital strategy?</b></p><p><b>Bogie Ozdemir:</b> We know from the last crisis that EC can increase significantly under stress — particularly when taking into account stressed inter and intra risk correlations. In their ICAAP/ORSA exercises, FIs define an explicit risk appetite under stress (minimum acceptable rating and capital adequacy) and ensure that they remain consistent with that risk appetite under a series of forward-looking conditional stress scenarios. As part of the Use Test under ICAAP and ORSA, FIs should demonstrate how the results of their stress testing and capital projection exercises have been incorporated into business planning decisions. In particular, the results of stress testing are used directly to inform the appropriateness of an FI’s capital buffer above its internal targets and whether the integrity of its capital structure is sufficient in stressed conditions. Degrees of vulnerability to stress must also be considered as part of capital optimization strategies.</p><p><i>Bogie Ozdemir is Vice President of Sun Life Financial Group, responsible for Enterprise Economic Capital, Operational Risk, Model Vetting & Risk Analytics, Risk Policy, and Economic Scenario Generation groups. He was a Vice President of the BMO Financial Group responsible for Economic Capital, Stress Testing, and Basel Analytics and jointly responsible for ICAAP. Previously, he was a Vice President of Standard & Poor’s Risk Solutions group, where he was globally responsible for engineering new products and solutions, business development and management. He is the coauthor of a book titled “Basel II Implementation: A Guide to Developing and Validating a Compliant, Internal Risk Rating System.”</i></p><p>The <b>GFMI</b> <b>2<sup>nd</sup> Annual Capital Adequacy, Strategy and Stress Testing Conference</b> will take place in New York, September 30–October 2, 2013. For more information, visit the <a href="http://www.global-fmi.com/CASS2013_BO">event website</a>.</p><p>For more information, please contact Michele Westergaard, Senior Marketing Manager, Media & PR, GFMI at 312-894-6377 or <a href="mailto:Michele@global-fmi.com">Michele@global-fmi.com</a>.</p><p><b>About Global Financial Markets Intelligence</b></p><p><i>GFMI is a specialized provider of content-led conferences for the financial markets. Carefully researched with leading financial market experts, our focused quality events deliver key bottom-line value through targeted presentations, interactive discussions and high-level networking opportunities. </i></p></div>Smarting up EU risk regulation: The ERF Action Planhttps://globalriskcommunity.com/profiles/blogs/smarting-up-eu-risk-regulation-the-erf-action-plan2013-02-25T15:29:04.000Z2013-02-25T15:29:04.000ZLorenzo Alliohttps://globalriskcommunity.com/members/LorenzoAllio<div><p><span>Those of us interested in EU risk regulation may be interested in the <a href="http://www.riskforum.eu/pdf/2012/ERF_ActionPlan_Nov12_F3_HI-RES.pdf" target="_blank">Action Plan</a> that the <a href="http://www.riskforum.eu" target="_blank">European Risk Forum</a> (ERF) issued a couple of months ago. The ERF Action Plan builds on and integrates the Commission Smart Regulation agenda, covering issues such as the EU Law on Administrative Procedures; public consultation, impact assessment and regulatory benefits; the role of the Commission’s Chief Scientific Advisor; and the application of the precautionary principle. </span><br /><br /><span>The ERF is a think-tank committed to improving risk management decisions at the EU level. Using a “horizontal”, cross-sectoral approach and drawing from OECD / WTO principles as well as direct private sector experiences, the Forum promotes the extensive use of evidence (especially science); the rigorous definition of policy objectives; clear and comprehensive descriptions and assessments of problems and their underlying causes; a realistic understanding of the costs and benefits of policy options; and timely and extensive consultation.</span></p></div>The Importance of Economic Capital in the New Regulatory Environmenthttps://globalriskcommunity.com/profiles/blogs/the-importance-of-economic-capital-in-the-new-regulatory2012-08-20T15:54:32.000Z2012-08-20T15:54:32.000ZMichele Westergaardhttps://globalriskcommunity.com/members/MicheleWestergaard<div><p>The Dodd-Frank Act and Basel III are going to change the way banks raise, allocate and manage capital. Banks need to prepare for these changes now and develop effective strategies for achieving capital optimization and sustainable return on equity. The <a href="http://www.mefinance.com/CAS_InterviewCL"><b>GFMI, a marcus evans, Capital Adequacy and Strategy Conference, September 12-14, 2012 in New York, NY</b></a>, will help banks to understand what the legislation means for capital adequacy, as well as what they need to do to achieve the optimum level of capital to ensure continuous profitability.</p><p>Not only do US banks have to understand the Basel compliance rules, but they also need to understand how this relates to the Dodd Frank compliance act and how these two regulations work together to build a capital strategy.</p><p>Clifton Loo answered a series of questions written by GFMI before the forthcoming <b>Capital Adequacy and Strategy Conference</b>. <i>All</i> <i>responses represent the view of Mr. Loo and not necessarily those of SunTrust Bank.</i></p><p><b>What do you think of the latest additions/clarifications to the Basel III requirements?</b></p><p>Overall the requirements are consistent with both the CCAR process and also the Dodd Frank Act. Although we agree in concept with the majority of the information, some of the requirements seem to have erred on the overly cautious side causing banks to be at conflict with their basic process of lending. Other items appear to need more thought like the change in the reps and warranties. </p><p><b>How do the regulations really affect capital adequacy on a daily basis?</b></p><p>Risk weights have gone up and there are less capital instruments that can be used to meet our capital requirements and ratios. In addition, depending on how you interpret the rules, some of the buffers may not actually be buffers because of the Prompt Corrective Action that is attached to failing to meet the requirements.</p><p><b>How important is economic capital (EC) at the moment?</b></p><p>EC is still important for risk adjusted pricing, portfolio mix management and risk tolerance/limit setting. However, EC is not important from a capital adequacy or regulatory perspective. Regulators have almost no focus on EC, but there are rumours this will change.</p><p><b>What are the ways (if any) to minimize regulatory capital?</b></p><p>This is a hard question because to minimize regulatory capital, you have to change your product mix as regulatory capital calculations are based on products. This change in product mix may make the bank less profitable or unprofitable. Banks may need to rethink how to measure profitable return from a regulatory perspective.</p><p><b>What do you feel attendees will gain from attending this conference?</b></p><p>I think the regulatory environment has become restrictive and this conference is a forum to discuss how businesses are reacting to the new regulatory environment to keep their businesses profitable. Also, the conference may be a good forum to rethink how EC and regulatory capital are used in the risk adjusted decision making process.</p><p><i>Clifton Loo, PhD currently serves as the Head of Economic Capital at SunTrust Banks. In this capacity, he leads the effort to calculate economic capital along with assisting in the bank-wide calculation of risk adjusted return on capital. In addition, his team builds the econometric models for the CCAR process. In previous positions, he has worked as Portfolio Risk Manager and Operational Risk Manger in SunTrust Robinson Humphrey and also a Model Validation Manager at SunTrust.</i></p><p>For more information please contact Michele Westergaard, Senior Marketing Manager, Media & PR, GFMI at 312-540-3000 ext. 6625 or <a href="mailto:Michelew@marcusevansch.com">Michelew@marcusevansch.com</a>.</p></div>