IBF's Inaugural Risk Management Seminar on Best Practices

 

The Institute of Banking and Finance (IBF) in partnership with the Risk Management Institute (RMI) of the National University of Singapore, today launch its inaugural Best Practices in Risk Management seminar alongside RMI's 3 rd Annual Risk Management Conference 2009 at the Ritz Carlton.

 

Over 200 senior executives comprising policy makers, risk managers, corporate treasury managers and financial controllers gathered at the conference to discuss the issues and challenges facing risk management professionals and their institutions.

 

IBF CEO Mr Paul Yuen said, "I believe that our collaboration today with RMI will benefit risk management professionals and the financial community . In a financial landscape that is more challenging and complex, risk Managers must not only master the core skills and knowledge, but also keep pace with the new developments. Enhancing risk management skill-sets is therefore crucial in laying a strong foundation to better safeguard an organisation's resilience and reputation.”

 

To support the risk management function within financial institutions, IBF has developed the Financial Industry Competency Standards (FICS) for Risk Management, covering a wide spectrum of 8 job families such as Asset Liability Management (Banking and Insurance), Credit Analytics, Credit Risk Management (Corporate and Consumer Banking), Market Risk Analytics, Market Risk Management and Operational Risk Management.

 

Besides Risk Management, the FICS covers 10 other industry segments. It is forward-looking and aims to develop skills sets that meet today's needs and the challenges of tomorrow.

 

During the seminar, the speakers (comprising senior management executives) shared their views and perspectives on several major industry issues such as:

 

Systemic Risk, Liquidity Shocks and Market Collapse – Lessons Learned Since 2008 – With the financial markets undergoing transformational changes globally, Mr David Dredge, Managing Director of Artradis Fund Management and Distinguished FICP, shared his observations on the fluctuations in capital flows, changes in risk appetites and highlighted the issues and challenges facing risk management professionals.

 

“A combination of moral hazard and regulatory oversight, led to a world where leadership in many banks leaned too far towards profit maximization, and away from capital preservation. Banks, in general, were being managed based upon reported numbers, with too little emphasis on true underlying risks. Accountability for proper risk management must be held in the hands of the people responsible for running these businesses - it is not merely the realm of regulators or internal control functions, it is the singular core responsibility of what financial institution leaders should provide to their stakeholders,” said Mr Dredge.

 

Financial Innovation – In examining the costs and benefits of financial innovation, Mr Elbert Pattijn, Chief Risk Offcer of DBS Bank, charted the key elements of a robust risk management structure that could truly be a business imperative and to add value to the business.

 

The Value of an Integrated Risk Management Approach for Financial Institutions – In examining the key changes and future development in the financial industry, Mr Tham Ming Soong, Executive Vice President and Group Head, Risk Management of United Overseas Bank, shared his insights on the imperative competency requirements and skill-sets for a successful risk management professional in a new Financial Landscape.

 

“The industry's experience in training risk management staff is that there are gaps in the training space for risk management professionals. Many risk management training programmes equip candidates for the technical and quantitative aspects of the job very well. However, much is lacking in soft skills training. It is the intention of the FICS training framework to fill this gap through competency-based training. Candidates are tested on specific, job-relevant functions with an emphasis on the practical aspects of risk management. ” said Mr Tham.

 

Risk Management: Where to From Here? Lessons Learned from the Global Financial Crisis – Using the analogy of banks being like airlines that were piloted by the most qualified management, and yet they still crashed into mountains, Dr Mark Lawrence, Managing Director of Mark Lawrence Group, emphasized the need to rebuild confidence and trust in risk management, and that the risk culture of a financial institution was one of the key determinants of effective risk management.

 

"The Global Financial Crisis was, amongst other things, a catastrophic failure of some of the world's largest and most iconic financial institutions to understand and effectively manage their risk, on an integrated, end-to-end basis. What are we to make of these multiple failures? Where to now, for the discipline of risk management? Clearly, 'business as usual' is not an option going forward. Rather, we must closely study these risk management failures - and successes - across many industry participants in order to understand the various elements of the very fundamental failures and weaknesses which were revealed, and respond accordingly. The good news is that for the first time the industry has converged on a core set of "best practices" in risk governance and management, including a comprehensive set of specific and detailed recommendations. I would therefore urge Singaporean banks (and Asian banks, more generally) who have, as a group, performed relatively well through the crisis to carefully study these new industry "best practices", and individually consider how best to strengthen their risk management frameworks and practices now, in advance of the next crisis,” Dr Lawrence commented.