Leveraging the Risk Cockpit to Manage Risk in Financial Services

Introduction:

Our client is a leading middle and back-office service provider to tier 1 banks. They are responsible for managing a wide range of business units and processes that involve significant risk. To effectively manage this risk, our client needed a comprehensive risk management tool that could track potential risks and help them respond quickly and effectively.

Challenges:

The client faced several challenges when it came to managing risk. These challenges included:

  • Managing a large number of risks across multiple business units and processes
  • Ensuring timely and accurate risk identification and response
  • Communicating effectively with stakeholders across several hundred users
  • Reporting on risk management activities to senior leadership and other key stakeholders

Solution: To address these challenges, we recommended the use of the Risk Cockpit, a comprehensive risk management tool. The Risk Cockpit provides a centralized platform for tracking risks and related incident, control, and resulting initiative information. It also allows for automated data feeds to feed metrics and create incidents, which helps ensure timely and accurate risk identification and response.

The Risk Cockpit is highly configurable, allowing the client to tailor it to their specific needs. This includes the ability to assign and monitor tasks related to risk management, which helps ensure that risks are being addressed in a timely and effective manner. The tool also provides a range of reporting and dashboarding capabilities, which allows the client to effectively communicate risk management activities to stakeholders across the organization.

Results: Since implementing the Risk Cockpit, our client has seen significant improvements in their risk management activities. These improvements include:

  • The ability to track over 1,500 risks across multiple business units and processes
  • The ability to quickly identify and respond to potential risks before they become significant issues
  • Improved communication and collaboration among stakeholders across several hundred users
  • Effective reporting on risk management activities to senior leadership and other key stakeholders
  • A significant reduction of risk incidents

Conclusion: The Risk Cockpit has proven to be a highly effective tool for managing risk in financial services. By providing a centralized platform for tracking risks and related information, the tool has enabled our client to improve their risk management activities across multiple business units and processes. The tool’s highly configurable nature and reporting capabilities have also allowed for effective communication and collaboration among stakeholders across the organization. Overall, the Risk Cockpit has helped our client manage risk in a more effective and efficient manner, and we highly recommend it to other organizations in the financial services industry.

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Managing Risk in Compliance with FCA and PRA Regulations with the Risk Cockpit

Introduction: Our client is a mid-tier broker in the UK that needed to comply with the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) regulations for risk management and reporting. They needed to capture their three-level Risk Taxonomy, which is required for regulatory reporting in the UK. Additionally, they needed to capture their board’s appetite for risk and their operating alignment.

Challenges: The client faced several challenges when it came to managing risk, including:

  • Capturing their three-level Risk Taxonomy accurately
  • Capturing their board’s appetite for risk and operating alignment
  • Complying with FCA and PRA regulations for risk management and reporting

Solution: To achieve these objectives, the broker decided to leverage the Risk Cockpit, a risk management tool that provides a powerful risk assessment workflow. The Risk Cockpit allowed the broker to capture their Risk Taxonomy and board’s appetite for risk accurately by engaging the first line of defence and senior management.

The Risk Cockpit allowed the broker to quantify their risk assessments using their organization’s risk matrix, which reduced the time taken to produce reports and provided operational evidence should it be required. The tool provided a single source of truth for all risk assessments, ensuring consistency across the organization and reducing the risk of errors.

Results: Since implementing the Risk Cockpit, the broker has been able to manage their risks more effectively, reducing the risk of non-compliance with FCA and PRA regulations. The broker can be confident that their risks are being assessed accurately, thanks to the engagement of the first line of defence and senior management in the risk assessment process. Through the implementation, the firm has been able to reduce ensure they are operating within their company’s risk appetite.

Conclusion: The Risk Cockpit has proven to be a highly effective tool for managing risk in compliance with FCA and PRA regulations. By providing a powerful risk assessment workflow, the tool has enabled our client to accurately capture their Risk Taxonomy and board’s appetite for risk. The tool’s ability to quantify risk assessments using the organization’s risk matrix has also reduced the time taken to produce reports and provided operational evidence when required. Overall, the Risk Cockpit has helped our client manage risk in a more effective and efficient manner, and we highly recommend it to other organizations in the financial services industry.

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Tier 1 Bank Leveraging the Risk Cockpit to Manage Default Fund Risk Exposure

The Challenge: A Tier 1 bank needed to effectively manage their default fund risk exposure in the context of their participation in a Central Counterparty (CCP). The bank required a tool that could help them understand the key drivers of their default fund risk, such as margin utilization of their clients, and manage associated incidents. They also wanted to drill through data to gain operational insights and tie this information back to key risks identified within their business.

The Solution: To achieve these objectives, the bank decided to leverage the Risk Cockpit, a risk management tool that provides a visual representation of the risks facing an organization. The Risk Cockpit allows the bank to track, analyze, and mitigate their CCP default fund risk exposure by providing flexible data integration and analysis functionality together with incident management.

By using the Risk Cockpit, the bank was able to easily integrate and visualize data related to their CCP default fund risk exposure. They now monitor their exposure to default fund risk in real time and take appropriate actions to manage their risk. In addition, the bank can participate in auctions that the CCP may hold in the event of a default more effectively. These auctions allow participants to bid on the defaulted portfolio of the participant, with the proceeds going to the default fund. By participating in these auctions, the bank can potentially reduce their exposure and turn a risk into a potential source of profit.

The Result: Overall, the bank is able to effectively manage their CCP default fund risk exposure and ensure the stability and resilience of the financial system by leveraging the Risk Cockpit. They can quickly identify areas of concern and take appropriate action. With the Risk Cockpit, the bank has been able to gain operational insights and tie this information back to key risks identified within their business. The tool has helped the bank manage associated incidents and make data-driven decisions to mitigate their risk. The bank is confident that they are managing their default fund risk exposure in the context of their participation in a CCP effectively.

Conclusion: In conclusion, the Risk Cockpit has provided a powerful solution to the Tier 1 bank’s default fund risk management requirements. By utilizing the Risk Cockpit, the bank is able to monitor their risk exposure in real-time, manage incidents, and participate in auctions more effectively. Additionally, the tool has provided operational insights that have helped the bank make informed decisions and manage risks proactively. The Risk Cockpit has empowered the bank to ensure the stability and resilience of the financial system while effectively managing their default fund risk exposure.

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