The development of risk management capabilities has become particularly important in the face of increasing volatility in the business environment. As the expectations of both shareholders and regulators regarding risk management escalates in response to this volatility, so to will pressure on senior management to develop the appropriate culture, processes and infrastructure that underpins their organisation's risk management approach.
However, risk management should be focused on more than simply mitigating or avoiding risk. Leading organisations understand that a strategic approach to risk management which optimises risk-driven opportunities can assist in their growth and returns. With broad experience across all industries, our Risk – Capital Management practice has the capability to assist your move towards this strategic approach to risk management.
Business management and risk management are two sides of the same coin. The better you manage your risks the better you manage your business. Therefore, understanding your risk profile and having the ability to manage it is more than just best practice - it is a strategic imperative.
Better business management reflects and drives many benefits including:
Our Risk and Capital Management centres of excellence covers the full spectrum of risk management; arranged around the following seven risk disciplines:
The overall management of risk that an organisation takes and holds to achieve its strategic aims. It is the sum of the various risks the organisation takes in the various categories and focuses on optimising the balance and interaction of the different types of risks. Learn more…
Described by the Basel Committee on Banking Supervision as "the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events." As such, operational risk captures business continuity plans, environmental risk, crisis management, process systems and operations risk, people related risks and health and safety, and information technology risks. Learn more…
Generally defined as the risk of default of an obligor to fully meet their commitments in a timely manner. The management of this risk covers:
Generally defined as the risk of the mark to market value portfolio, instrument or investment increasing or decreasing as a result of volatility and unpredicted movement in market valuations. Learn more…
The assessment and quantification of the likelihood and financial impact of events that may occur in the customer's world that require settlement by the insurer; and the ability to spread the risk of these events occurring across other insurance underwriter's in the market. Risk Management work typically involves the application of mathematical and statistical modelling to determine appropriate premium cover and the value of insurance risk to 'hold' vs 'distribute'. Learn more…
Treasury Risk is the risk associated with the management of an enterprise's holdings – ranging from money market instruments through to equities trading. Liquidity and Capital Risk is generally defined as the risk associated with an enterprise's ability to convert an asset or security into cash to prevent a loss. Capital risk is generally defined as an enterprise's access to cash at any given time and balancing this with its efficient use. Learn more…
Generally defined as the risk of have the 'licence to operate' withdrawn by a regulator, or having conditions applied (retrospectively or prospectively) that adversely impact the economic value of an enterprise. Learn more…
At the highest level we provide 3 generic Risk & Capital Management services:
Create the right risk strategies to achieve the enterprises strategic aims and implements the optimum frameworks to ensure risk is appropriately managed.
Putting words into action – delivering risk performance within agreed tolerances at the sharp end – day after day.
Create the optimum organisational solutions and equips the enterprise with the right skills and capabilities to manage risk to achieve strategic aims.
The following is a generic risk framework that can apply at the Enterprise level or equally to each of the individual risk categories (eg. Liquidity Risk, Operational Risk, Credit Risk):
The high level statement that sets out the broad policy as to how risk will be taken and managed by the enterprise to achieve its strategic objectives.
Identifies, assesses and evaluates key risks facing the enterprise against a number of facets including probability and impact.
Sets out both at the Board and Executive, the level of risk tolerance the enterprise is willing to take and hold to achieve its short term (1 year) and medium term (1 – 3 year) aims.
The sum of the actions is undertaken by management and the risk function to actually manage the risks identified in the risk profile to the tolerance determined by the enterprise's Risk Appetite. This includes the design and implementation of policies, processes and procedures.
The process of balancing the totality of risk across the overall enterprise. This includes optimising the use of capital and effort against each risk category. Portfolio management principles apply particularly for FS Enterprises.
The extent to which risk mitigation has maintained risk exposure within limits established by the enterprise's Risk Appetite.
The process between predicted and actual performance. Where the variation is significant, it is important to develop remedial strategies to return performance to the expected range.