This follows with a review of how risk management and compliance functions differ and then interrelate.
Firstly, the presentation examines the roles and responsibilities of the compliance function. Specifically, it focuses on the function being responsible for the management and oversight of the defined rules, regulations and business guidelines that govern the activities of each business. It examines each compliance role in detail and will particularly address the creation of internal guidelines that address market exposures, counter party risk and credit risk.
Next, it addresses risk management which is focused on the overall risk management environment. Its roles and responsibilities are somewhat more abstract than compliance and include, but are not limited to, addressing risk conditions, appropriateness of risk levels, product risk stress testing, competency of staff taking risks, risks of new products, and development of risk management policies.
The second part of the presentation addresses nine actual business risk events. It will detail each event in terms of the nature of the event, what caused the event, the risk consequences experienced, risk preventives that were absent and what management practices should have been present. As noted, these events will demonstrate the importance of a solid risk management environment.
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