Jan van Vulpen

presenterbelchManagement

Nov 18, 2013 (3 years and 10 months ago)

65 views

Governance of Compliance
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A PRACTITIONER’S VIEW

Risk
and

Compliance working
effectively together to address the
business’ Risks

Jan van Vulpen




June 7, 2007

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“It would be a mistake to conclude that the
only way to succeed in banking is through
ever
-
greater size and diversity.


Indeed,
better (integrated Compliance and)
Risk Management may be the only truly
necessary element of success in banking
."






Former Federal Reserve Board Chairman






Alan Greenspan, October 5, 2004

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Evolving Compliance




Our Industry and organization is in the throes of great
transformation

Drivers


Evolving compliance is imperative to support ABN AMRO
Asset Management’s ambition

Change Imperative


Enhancing risk
-
reward decision making through aligning risk
appetite with strategic planning processes


Streamlining sales and delivery of products/services to
market


Higher product profitability through risk
-
adjusted pricing

Value Proposition

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Today’s Discussion

Why Evolving Compliance?

Classical set
-
up Compliance &
Risk Management

ABN AMRO’s “Evolution”

Lessons learned

Path Forward

Approach to more integration of
Compliance and Risk Management

Why Evolving Compliance?

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The Environment is Changing…

As the business environment evolves, risk management is
quickly becoming a significant competitive differentiator

Increasing cost of regulatory
compliance

Embracing opportunities in
new markets

Infrastructure Rationalization

Consolidation to achieve
strategic balance

Global trends and continuing industry evolution has driven leading banks
to form a more integrated approach to managing Compliance AND RISK
MANAGEMENT.

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Increased scrutiny


Higher expectations


Assessing Components: compliance & risk management
culture, risk control, extreme event management, risk and
capital models, and strategic risk management


Increasing interest in evolving Compliance


Greater scrutiny of capital raising using exotic transactions


Rewarding greater disclosure


Punishing negative surprises

Successfully embracing these changes will support ABN AMRO
Asset Management’s ambition

Investors

Rating Agencies

Investment Banks

Regulators

Stakeholders Are Watching…

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Firms With An Integrated Compliance and Risk Management
Program Can Answer The Following Questions …

Strategy

Formulation

Monitoring

Business

Execution

Governance

Balance
Of

Risks

How do these
compliance and
risk factors
affect your
balance of
risks?

… how comfortable are you at answering these questions?

1. For a new
opportunity, what
factors have the
biggest impact on
your corporate
strategies?

4.
How effectively do
reports measure
correlations amongst
these risks?

3.
How are Business Units
managing and integrating
these compliance issues
and other risks to achieve
their business objectives
and enhance profitability
with appropriate pricing?

2.
What is the
impact of these
factors on your
organization’s
risk appetite?

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To remain competitive, ABN AMRO Asset Management evolves…

Classical Set
-
up Compliance & Risk
Management

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……

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Classical Set
-
up Compliance & Risk Management

Classical approaches to managing risk focused on establishing well
maintained and controlled processes around single risk factors.

Historically, this approach to managing risk has been
appropriate for the environment. However, as the environment
changes, so must the discipline.

Line of Business

Credit

Operational

Market

Compliance

Country

Liquidity

Strategic

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Inability to identify, analyze and transplant winning formulas


Competitors with better risk
-
based pricing cherry pick customers


Lack of inter
-
related risk analysis limits additional customer cross sell


As competitors continue to evolve their compliance and risk
management approach, classical approaches will increasingly
erode an organization’s ability to achieve its strategic objectives.


Classical
Capabilities


Single Risk View


Reward
-
based
Decision Making


Risk Controlling
Culture

Achieve Objectives

1.
Share of Wallet

2.
Product Profitability

3.
Sweet Spot Clients

4.
Winning Formulas

Environment

Limitations

Classical Set
-
up Compliance and Risk Management

Approach to more integration of Compliance and
Risk Management

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Evolving an Existing Foundation

ABN AMRO has accomplished and continues to make progress towards
evolving its risk management capabilities.

Meta Policy

Governance

Strategic

Planning

Basel II

Risk Appetite

Compliance

Succession

Planning

Economic Capital

Current

State

Desired

State

Customized Plan to Evolve

Common Compliance and Risk Management
Framework

Portfolio

Management

“One Bank”

Capital Allocation

People

Data

“Sweet Spot”

Strategy

Global

Outlook

SOXA

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Benefits Of An Integrated Approach




Enhanced risk
-
reward decision making through aligning risk appetite with
strategic planning processes


Streamlined sales and delivery of products/services to market


Higher product profitability and reduced write offs through risk
-
adjusted pricing


Fewer compliance penalties through integrated compliance monitoring

Achieving the benefits of evolving risk management will support
ABN AMRO Asset Management’s ambition.

Evolved
Capabilities


Portfolio Risk View


Reward
-
Reward
based decision
Making


Risk Aware Culture

Achieve Objectives

1.
Share of Wallet

2.
Product Profitability

3.
Sweet Spot Clients

4.
Winning Formulas

Environment

Benefits

Lessons Learned

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Lessons Learned

Sponsorship

1.
Successful Risk
Management
implementations
require senior
management and
Board support.

Change Management

2.
Significant effort will be
required to overcome
organizational inertia and
change a mindset to a risk
-
reward culture

Sustainability

3.
To sustain progress and
momentum, maintain
program team continuity.

Project Management

4.
Do not underestimate
launch complexities or
cultural challenges.

5.
Pilot programs prior to
global roll outs.

Compliane and
Risk Management
Framework

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Evolving Around The Globe

..better (integrated compliance and) risk management may be the
only truly necessary element of success in banking
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Alan Greenspan

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Contact

J. van Vulpen

ABN AMRO Asset Management

De Entrée 99


197

Amsterdam

+31 20 3832497