Measuring the ROI of GRC. Part 1: “Your Mileage May Vary”
When looking at the return on investment (ROI), “it’s not about getting the highest number—it’s what is most defensible,” said Hyoun Park, Principal Analyst at Nucleus Research. Park was speaking on March 28, 2013 to a webinar audience on the topic of how to quantitatively measure the ROI on governance, risk assessment, and compliance (GRC). The two-speaker panel, convened by the Global Association of Risk Professionals (GARP), based their remarks on a study released in October 2012 by Nucleus Research (cover shown here). The report states “this research was conducted in context of the usage of IBM OpenPages, a software […]
Global Challenges in Chemicals & Energy: Standardizing & Accelerating R&D
“The iPhone of experimental chemistry” standardizes and simplifies experimental chemistry in a paradigm-shifting manner, according to Michael Schneider, SVP of Chemspeed Technologies, and the holder and author of more than 30 publications and patents. He was delivering a presentation on March 19, 2013, through a webinar organized by Chemical & Engineering News (C&EN). “The iPhone of experimental chemistry” is based on a sleek desk-sized compartment that apportions chemicals in ”1-2-5” money analogously staggered (but in mmoles instead of cents) , ready-to-apply formats. It dramatically simplifies the experimental work in a multitude of “applications” in traditional experimental lab work and/or as […]
Foreign Asset Income Trusts
“Income trusts should be viewed as a story in capital markets innovation,” said Jon Northup of Goodmans LLP. He was speaking at a luncheon at the National Club in Toronto, sponsored by the Chartered Financial Analysts (CFA) Society Toronto on March 5, 2013. The introduction of SIFT (Specified Investment Flow-Through) rules by the Canadian government in October 2006, “effectively eliminated Canadian income trusts,” Northup said. There are two exceptions: (1) a trust that does not involve Canadian real estate, immovable or resource properties used in carrying on a business and (2) a trust that qualifies as a REIT (real estate […]
Monitoring Risk While Pursuing High Returns: The Importance of Being Quantitative
“A quantitative model provides a very different insight than a rating,” said Rajan Singenellore, Global Business Manager of Risk & Valuations at Bloomberg. Models are based on objective inputs and usually publicly available information, whereas ratings are based on subjective factors and inside information. Singenellore was speaking about quantitative models as the second part of a two-part webinar presentation “Monitoring Risk While Pursuing High Returns” on March 7, 2013 organized by the Global Association of Risk Professionals (GARP). “A quantitative model lets you understand risk drivers and sensitivities,” he said, such as the effects of input changes on default risk […]
Monitoring Risk While Pursuing High Returns: Who Pays the Piper?
“Rating biases affect how we think about methodologies,” said Elliot Noma, Managing Director at Garrett Asset Management. “A rating agency paid by the issuer will likely give the firm the benefit of the doubt,” whereas a rating agency paid by the investor might want to more stringently evaluate the firm. “Both evaluations have the risk of error” due to bias. Noma was speaking about evaluation of credit risk as part of the webinar presentation “Monitoring Risk While Pursuing High Returns” on March 7, 2013 organized by the Global Association of Risk Professionals (GARP). He began by dividing non-structured credit exposure […]
The Fed, Foreign Banks and Basel III: Part 3. Necessary Complexity?
As the US moves to adopt Basel III, there are regulatory initiatives that are expected to be implemented, said Peter Went, VP, Banking Risk Management Programs, GARP, on February 14, 2013. The Basel Committee has several proposals that are issued for consultation and discussion, including ones that affect liquidity rules, the securitization framework, trading book review, and consistency of risk-weighted assets. Went was the second speaker at a webinar organized by the Global Association of Risk Professionals (GARP) regarding regulatory reform of foreign banking operations (FBOs) in the United States and the implementation of the Basel III framework. (This continues […]
The Fed, Foreign Banks and Basel III: Part 2. Capital Concerns
“Some of the rules are in direct conflict,” said Peter Went, VP, Banking Risk Management Programs, GARP. He was the second speaker at a webinar presented on February 14, 2013 organized by the Global Association of Risk Professionals (GARP) regarding regulatory reform of foreign banking operations (FBOs) in the United States and the implementation of the Basel III framework. The “conflict” refers to rules in the Dodd-Frank Act versus the globally agreed Basel III Accord’s guidelines. Both regulatory attempts apply the G-20 principles on financial regulation (Pittsburgh 2009 summit). The US implementation of the Basel III framework differs from the […]
The Fed, Foreign Banks and Basel III: Part 1. A Long Hard Look
Foreign banking operations (FBOs) in the United States are about to face a whole new set of regulations that may dampen their enthusiasm for US-based operations, according to a February 14, 2013 webinar organized by the Global Association of Risk Professionals (GARP). “The Fed observed over time that US branches were increasingly used to fund the home office operations,” said Charles Horn, partner at Morrison Foerster, who was the first speaker at the panel. Other concerns of the Federal Reserve Board are the increased complexity of FBOs, and “the availability of home country financial resources for branch offices.” The goal, […]
Managing Model Risk: Part 3. Collective Hubris
There are more things in heaven and earth, Horatio, Than are dreamt of in your philosophy. – Wm. Shakespeare, Hamlet, Act 1, Scene 5. “We are building the language in which to discuss model risk,” said Boris Deychman, Director of Model, Market and Operational Risk Management at RBS Citizens Financial Group. He drew an analogy with the world of wine experts, who have developed specific vocabulary to talk about aroma and taste. “They don’t say just: this tastes like wine.” Deychman was the third and final speaker of a panel invited by the Global Association of Risk Professionals to discuss […]
Managing Model Risk: Part 2. The Impact of Basel III
“More consideration must be made for regulatory capital changes that focus on small but potentially devastating risks or risk factors,” said Peter Went, VP, Banking Risk Management Programs at GARP. He was speaking about Basel III and its impact on modelling regulatory capital at a webinar on January 29, 2013, organized by the Global Association of Risk Professionals to discuss model risk management. Went mentioned three developments in the Basel III that directly impact capital models and model risk in regulatory capital determination. First, Basel III introduces a risk-invariant leverage ratio of 3 percent in recognition that models may be […]