Risk Management

Risk Management a Priority after Latest Meltdown:  There was no one mistake or one bad investment that led to Bear’s catastrophic failure, but a series of interlocking risky investments, piled onto other risky investments. The primary investment was in subprime debt securities. Once that began to slow down and firms started to lose money, short-selling of its stock and its own credit swap arrangements sped the process along.

Source: CCH Wall Street

How Lehman Brothers’ Own Risk Management Strategy May Cause it to Fail: Yes, they had risk management, but it mostly used the "Value at Risk" system invented by JPMorgan in the early 1990s. VAR appears to have been designed to let the traders get on with the business of making real money, while at the same time keeping the top brass from worrying too much about the risks traders were taking. It makes a number of mathematical assumptions that are provably false in real life.

Source: Money Morning

Meltdown Means Opportunity for Risk Managers:  An often-misunderstood category of finance worker, which already was showing a rising profile, may now be in line for a quantum leap.

Source: CFO.com

CASE STUDY: Risk Management Training and GuardianERM.net Technology Delivers Efficiency and Effectiveness

Our client had appointed a new Chief Executive Officer and new manager of Internal Audit and Risk Management.   The Risk and Audit Committee had recognised the need to improve various aspects of the organisation’s risk management framework to support good practice governance, to be more proactive and to meet critical regulatory requirements.  Specifically, the organisation wanted to:

§         Improve the risk management culture and risk/opportunity awareness;

§         Enhance the risk assessment capabilities of senior managers and supervisors;

§         Streamline risk management, compliance and internal audit activities,

§         Reduce paperwork and minimise fragmented processes; and

§         Improve the quality and timeliness of risk management reporting to the Board.

InConsult was selected to support the successful delivery of these initiatives.  After obtaining an understanding of the organisation’s needs and desired outcomes, InConsult conducted risk management training for managers and supervisors to improve their risk assessment skills and capabilities.  The training reinforced the Boards commitment to risk management, presented an overview of the organisation’s risk management framework and provided staff with greater confidence in undertaking risk profiling workshops and other important activities.

In order to improve the organisation’s risk and audit processes, documentation and reporting, the organisation selected InConsult’s GuardianERM.net technology to document risks and controls, manage compliance obligations, enable control self-assessments and conduct risk-based internal audits.

The Manager, Internal Audit and Risk Management said ”Greater staff confidence in performing various risk management activities along with simple to use GuardianERM.net technology has helped us improve our risk management framework, eliminate ‘paper-based’ risk registers, improve transparency of risk information and significantly improve Board reporting”.

If you have any risk management, governance, audit or business continuity matters you would like to discuss, contact InConsult on 02 9241 1344.  

Embedding risk management is a work in progress says study:  While risk management in companies across Europe has “matured,” respondents to the latest survey from the Federation of European Risk Management Associations admit there is still much work to be done to embed risk management processes in their operations.

Source: FERMA

Enterprise Resilience

UPDATE Avian Influenza:  The Ministry of Health of Indonesia has retrospectively announced two confirmed cases of human infection with the H5N1 avian influenza virus.  Of the 137 cases confirmed to date in Indonesia, 112 have been fatal.

Source: World Health Organization

Preparing for the Unexpected:  This brochure is a ready reference for Australian households and businesses and provides clear advice and practical actions to prepare for and deal with a range of emergencies.

Source: Emergency Management Australia

7 Steps to Stop Finger-Pointing in a Crisis:  Some suggestions to help your team avoid finger-pointing in a time of crisis.

Source: Harvard Business Publishing

Workplace recovery strategies for a changing world: Risk is changing. And the pace of change is accelerating. The challenge for business continuity managers is to ensure that day-to-day practices stay ahead of the curve. In no area is this truer than in workplace recovery.  In order to remain at the cutting edge of workplace recovery, to ensure maximum protection for the organization and to reduce recovery time objectives to the absolute minimum, three areas need to be considered. These are threat trends, technology changes and human resources.

Source: Continuity Central

Governance & Compliance 

Leading with integrity:  Chief executives must take the lead in articulating their vision of a company that meets its targets while following the highest ethical standards. At the very heart of high performance lie fundamental forces that, if left unconstrained, cause corporate corruption.

Source: Ethical Corporation

Money laundering risks of prepaid stored value cards:  In the past decade, there has been an increasing reliance on electronic means of transferring funds for personal and business purposes. One recent development has been the emergence of plastic cards with the capacity to store value electronically, which can be used for a range of retail transactions. This paper describes the nature of these risks and considers whether existing regulatory measures are adequate to address them.

Source: Australian Institute of Criminology

Internal Audit

New Global Standards Released:  From 1 January 2009, the internal audit profession will be regulated by an updated set of global standards.  Specifically, internal auditors must be alert to the significant risks that might affect objectives, operations, or resources of the organisation and use risk-based plans to determine the priorities of the internal audit activity, consistent with the organisation’s goals.

Source: The Institute of Internal Auditors

Financial Management

Financial Crisis Spurs CFOs to Weigh Risk Management Practices  The financial crisis gripping the United States has senior finance executives more likely to be concerned about their firms' risk management practices (72%) than they are about such issues as accessing both long-term debt financing (65%) and short-term financing (61%).

Source: Insurance Journal

Systemic Risk Haunts Credit-Default Swaps:  The credit-default swap has been called both "the most important instrument in finance" by former Federal Reserve Chairman Alan Greenspan and a financial "weapon of mass destruction" by Warren Buffett. This week's bankruptcy of Lehman Brothers and bailout of the insurer AIG may have proved both men right, while testing the limits of the $62 trillion market for such financial derivatives..

Source: CFO.com

Occupational Safety, Health & Environment

Mining amendment to OHS Legislation:  The Occupational Health and Safety Amendment (Application to Mining Workplaces and Coal Workplaces) Regulation 2008 expands the application of the Occupational Health and Safety Regulation 2001 to mining workplaces and coal mines from the 1st September 2008. While occupational health and safety matters for the mining industry will continue to fall under the jurisdiction of DPI, some licensing/ permissioning functions will be administratively coordinated through the following arrangements.

Source: WorkCover

Government

Updated Guidelines For The Model Code Of Conduct For Local Councils In NSW: The revised Model Code of Conduct for Local Councils in NSW came into effect from 27 June 2008. The Department has now revised and updated the guidelines that support the Model Code.

Source: NSW Department of Local Government

Better Practice Guide to Risk Management:  The guide looks at the key principles integral to effective risk management, and provides implementation suggestions applicable to the public sector.

Source: Queensland Audit Office

Financial Services

The bigger picture: Enterprise risk management in financial services organisations:  The report is based on an Economist Intelligence Unit survey of 316 senior executives from around the world. Among the respondents questioned for the study, 59% say the credit crisis has forced them to scrutinise their risk management practices in greater detail. Yet despite a growing appetite for ERM, many companies are still in the early stages of implementation, with only 18% of those surveyed saying they have an ERM strategy in place that is well-formulated and rolled out across the business. A key challenge for many financial services companies is that the move to an enterprise-wide risk management approach is lengthy and often involves a shift in corporate culture.

Source: Economist Intelligence Unit

Upcoming Events

5 November 2008:  Introductory Risk Management Training (one-day) 

This down-to-earth and ‘entertaining’ training program helps ensure that all people involved in risk management activities in your organisation understand the key concepts of risk management, internal control and audit using the AS/NZS 4360 Risk Management Standard.

What have past participants said about this  course?

“Very useful course. Clearly delivered and planned”, “I found it excellent”, “Very interesting and engaging”.

At only $349 (incl GST), it is the best ‘value for money’ introductory risk management course... more info or book now?

(NEW) 6 November 2008:  Business Continuity Workshop (one-day)   

The BCM workshop is designed to provide the fundamentals of BCM including key components, stages, roles and responsibilities in working together as a team under stress.

*** Prefer in-house training tailored to your needs?  Contact us on 02 9241 1344 to find out more***