Risk Management - The Supervisor’s Perspective National Supervisors’ Forum November 2013 David Matthews. Objective. 1. To provide you with an overview of risk management: - Rationale, terminology, risk systems - Two aspects – Risk Management system / process Risk Management culture
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Risk Management -
The Supervisor’s Perspective
National Supervisors’ Forum
1. To provide you with an overview of risk management:
- Rationale, terminology, risk systems
- Two aspects –
2. To explain the Supervisor’s perspective on Risk Management – focus on culture!
Analyse & Measure
Evaluate Internal Controls
Monitor & manage
What is Risk Management?
Risk Management is a formal process that analyses prevailing risks facing the credit union and identifies appropriate responses for addressing them
A risk is anything that could impact negatively on your credit union – transactional or organisational
Impacts: Financial Loss, Disruption to Operations, Reputational Damage, Physical
Responses: Accept – Mitigate – Transfer – Avoid
Republic of Ireland – now required by legislation
Northern Ireland – not required by legislation
All Board and management decisions and activities should be framed within a risk management culture
Lessons from recent years where risk was not considered
Risk Management Culture - a credit union’s collective system of values that shape its risk decisions
Risk Capacity – how much risk can we afford to take? Determined by how much capital we have
Risk Appetite – amount and type of risk that we are prepared to seek, accept or tolerate
Zero, Low, Moderate, High
Risk Tolerance – the actual level of risk that we will accept
Inherent Risk – the risk posed before systems and controls that relate to the risk are considered
Residual Risk – the level of risk after considering the effectiveness of systems and controls put in place to manage the risk
Risk Management System
The Supervisor’s perspective
Risk-based approach to decision making – some examples
Manager and six tellers
Thank you for your attention!