Issue #36

Editor's Letter - The way things are done around here: In the issue this month, we again turn to the subject of culture and ethics in banking.   News: New strategic approach for the FCA; News Review; OECD reports dispels foreign bribery myths; US regulators clamp down on cybersecurity.   Spotlight - Toxic Atmosphere: An academic study has proven that the prevailing banking culture weakens and undermines honesty, while another study shows ethnic diversity deflates price bubbles. Victoria Tozer-Pennington reports.   Tracking Litigation: Fines and the accompanying litigation costs are hurting banks - the litigation tracker from KBW provides some startling statistics.   How To... Select a software solution: RiskBusiness’ Mike Finlay takes a look at some of the issues and outlines a structured approach to selecting and commissioning a commercial solution.   Virtual Operational Risk: Simudyne sets out how simulations can help firms prepare for catastrophes.   Limits Need Teeth: In a rebuttal to the continuing attack on the broken banking culture, Nick Leeson argues that bankers and traders push limits on a daily basis, and so it is time those limits grew teeth.   Sharing Scenarios - Vendor performance failures: This month the scenario explores a vendor or service provider failure to perform in the manner for which it has been contracted, resulting in both financial and processing impacts on the firm.   Risk Classifications - Organised labour actions: In this issue, RiskBusiness’ Mike Finlay takes a look at the implications of organised labour actions on the firm.   Dear CEO: Every month an anonymous chief risk officer of a financial services firm writes a letter to his CEO detailing some of the issues he has always wanted to raise.

Issue #35

Editor's Letter - Off with their heads!: The word “Banksters” has entered common parlance.   News: FX manipulation fines exceed LIBOR; News Review; Operational Risk Event Timeline; Six banks fined for FX failings; Bank of England fires chief FX dealer   Spotlight - Fixing the culture problem: The multi-billion foreign exchange market manipulation fines have politicians and regulators again promising the fix the broken banking culture. Victoria Tozer-Pennington asks whether culture can be regulated.   Focusing on the risks: External operational risk events are just that – incidents that happen outside the firm. We shouldn't be too concerned about them… or should we?   Who owns regulation?: Meredith Gibson, Head of Legal Risk at Santander UK, and Helen Pykhova, Director of The Op Risk Company and Chair, Operational Risk Committee at the Association of Foreign Banks, ask who owns regulation or what happens if nobody does?   How To... Build a legal risk framework: Matthew Whalley sets out the four essential elements for creating an effective legal risk management framework.   ORIC International's operational risk landscape: New data from ORIC International provides a unique insight into the loss profile of the insurance industry for benchmarking purposes   Sharing Scenarios - Shareholder lawsuit due to mismanagement: This month the scenario explores the potential implications of a lawsuit against the firm and/or its senior executive management by shareholders.   Risk Classifications - Intellectual property infringements by third party: RiskBusiness’ Mike Finlay explores third party acts that prejudice the firm’s intellectual property rights.   Dear CEO: Every month an anonymous chief risk officer of a financial services firm writes a letter to his CEO detailing some of the issues he has always wanted to raise.

Issue #34

Editor's Letter - Looking forward: As the UK and US simulate a financial crisis, regulators doubt banks’ scenario planning.   News: Banks’ implementation of operational risk principles “insufficient”; News Review; “Goldman Tapes” rattle US regulators; Jury out on simpler approaches revisions.   Spotlight - Tip of the iceberg: The Markets in Financial Instruments Directive II (MiFID II) will fundamentally change the European trading environment but the operational risk impact has been largely overlooked.   Enhancing cyber defence: Intelligence is key to fighting cyber crime, writes The Risk Universe’s Nick Kochan.   Clash of clans - Operational risk v Lean six sigma: Ideologically, the methodologies of Operational Risk and Lean Six Sigma appear to be poles apart, but scratch just below the surface and it becomes clear they also share similar challenges in establishing themselves within the corporate landscape, says Max Cardew.   How To... Build a scenario assessment programme: RiskBusiness’ Mike Finlay looks at the issues surrounding scenario analysis and provides some guidance in how to create a robust scenario assessment programme.   Sharing Scenarios - System intrusion with the intention of facilitating fraudulent acts: This month the scenario explores system intrusions with fraudulent intent, which due to increasingly more rigorous regulatory compliance requirements around information security, represents a significant headache for virtually every firm, irrespective of industry.   Dear CEO: Every month an anonymous chief risk officer of a financial services firm writes a letter to his CEO detailing some of the issues he has always wanted to raise.   Risk Classifications - Investment fraud: RiskBusiness’ Mike Finlay takes a look at an issue which, while not only limited to the kind of cases made famous by Charles Ponzi in the early 1920s, remains prevalent today - investment fraud.

Issue #33

Editor's Letter - Fixing systemic operational risk: LIBOR, IDSAfix, Gold prices, FX rates, energy prices – is there anything left to fix?   News: Investor sues ISDAfix over rate rigging; DTCC database a magnet for hackers; US banks increase operational risk capital following parallel run exit; complaints database changes heighten operational risk.   If You Ask Me - Ebola risk - from epidemic to pandemic?: Annie Searle examines the spread of Ebola and lessons for financial sector planning.   Spotlight - The view from above: Large banks have been publicly complaining about the compliance burden being placed upon them in recent years but it is well founded. The Risk Universe takes a look at the level of regulatory change impacting firms since the start of 2014 and analyses in detail the most significant rules affecting operational risk management.   Getting It Right: Banks are stumped on how to create a living will that is fit for purpose, thankfully regulators have provided more guidance on what they want.   In Flight Hacking: Researchers have shown that it is possible to hijack a commercial airliner using its onboard WiFi signals, opening up a whole new world of risk for airlines and aircraft operators.   How To... Build a Three Lines of Defence model: There is a lot of discussion as to what constitutes a three lines of defence model, but little understanding of the ramifications of actually implementing a risk agnostic, organisation-wide three lines of defence model. RiskBusiness’ Mike Finlay provides some guidance   Sharing Scenarios - Online banking system outages: This month scenario addresses system outages, a perennial issue, made worse in the current age of social media when disgruntled clients can tweet their frustrations to the world, but one that can have a myriad of causes.   Risk Classifications - Public disorder: RiskBusiness’ Mike Finlay takes a look at the risk of public disorder, which increasingly occurs in financial centres around the world.   Dear CEO: Every month an anonymous chief risk officer of a financial services firm writes a letter to his CEO detailing some of the issues he has always wanted to raise.

Issue #32

Editor's Letter - Not Worth the Risk: The risk of sanctions non-compliance has firms exiting certain businesses altogether.   News: Regulatory burden hits HSBC profits; FiNCEN seeks “culture of compliance”; Barclays defends new complaint; Standard Chartered expects further regulatory action; New APRA supervisory framework released; The cost of making bankers accountable; UK to criminalise energy market abuse; FCA enforcement actions annual report   Connecting Responsibility, Ethics, Conduct and Strategy: Professor Kalu Ojah explores Corporate Social Responsibility in the lives of financial services firms.   Managing People Risk Through Corporate Risk Culture: As regulators increasingly focus on the conduct of firms and individuals, Alan Dunk considers what firms might be doing to encourage the right behaviour and to discourage bad behaviour.   Spotlight - The Dark Web: Following a recent BBC News story about components of the dark web itself being hacked, RiskBusiness’ Mike Finlay investigated the implications of the dark web from a risk management perspective.   How To... Improve Sanctions Compliance: This article sets out the key issues that all compliance personnel need to be familiar with and ensure are being addressed as well as some tips for improving sanctions compliance programme efficiencies.   Sharing Scenarios - Business Disruption due to a Pandemic: This month, due to the severity and rapid spread of the Ebola outbreak across Western Africa, the scenario addresses the potential implications for a firm whose business activity is disrupted by such a pandemic.   Dear CEO: Every month an anonymous chief risk officer of a financial services firm writes a letter to his CEO detailing some of the issues he has always wanted to raise.   Risk Classifications - Sanctions or Embargo Breaches: RiskBusiness’ Mike Finlay takes a look at firms that deliberately or inadvertently breach rules around business dealings with restricted nations, countries, organisations or individuals.   Classified: Find all your job advertisements here alongside information on upcoming industry events and The Risk Universe monthly comic.

Issue #31

Editor's Letter - Conduct, Ethics and Behaviour: Fines, cyber threats and crypto-currencies – lets pause for a moment and consider the threats and risks facing emerging and developing nations, then lets reassess the significance of much of what those in the developed world take for granted.   News: A number of very significant fines, the potential coming-of-age of cryptocurrencies, debt collection mis-conduct, new regulatory scorecards and the now perennial topic of cyber issues.   A Path to Good Culture: AIG actuary Chris Smerald shares his thoughts and experiences in guiding a firm from zero to outstanding in terms of risk culture.   Spotlight - Sustainable Corporate Social Responsibility: The Risk Universe’s Bethan Treanor takes an initial look at how financial services firms in developed nations address the thorny issues around sustainability and corporate social responsibility.   Industry Research - Creating Value from Loss Events: New research from ORIC International identifies 4 key enablers deemed to be essential for an effective risk event management process.   How To... Build a business case for a GRC solution: Blue Hills Research provides guidance for firms considering buying a GRC solution.   Social Media Risk - The Risks of Being Social: Social Media Risk Consulting’s Jeremy Swinfen Green introduces the concepts of social media risk and its implications for any firm.   Sharing Scenarios - Environmental damage where the firm is financier or guarantor: This month’s scenario looks at the potential consequences of financing environmentally unfriendly business. Find out the results of last month’s scenario benchmarking exercise on business disruption through threats and hoaxes.   Dear CEO: Every month an anonymous chief risk officer of a financial services firm writes a letter to his CEO detailing some of the issues he has always wanted to raise.   Risk Classifications - Governance Failings: RiskBusiness’ Mike Finlay takes a look at the risk of corporate governance failings.   Classified: Find all your job advertisements here alongside information on upcoming industry events and The Risk Universe monthly comic.

Issue #30

Editor's Letter: Fines, sanctions and more fines – anything else to worry about? Unfortunately yes, the virtual, digital, cyber world.....   News: More sanctions and fines, concerns around systemic risk and cyber crime, a new regulator and forthcoming changes in regulations, a damning report on the quality of external audits, while the IOR makes awards.   Opinion: Columnist Annie Searle takes a look at insider threats and why, in her opinion, human behaviour is perhaps the most significant threat to the firm.   Interview - Toshihide Iguchi: The Risk Universe interviews former Daiwa Bank rogue trader Toshihide Iguchi on his views on what happened at Daiwa and some of the parallels with today’s issues in the industry.   Book Review : My Billion Dollar Education – In the Mind of a Rogue Trader: Toshihide Iguchi shares the inside details of how he concealed what became a $1.1bn loss for 12 years   Spotlight - Cyber Defence: Mike Finlay attends the public launch of the Bank of England’s CBEST cyber vulnerability testing framework and takes a look at initiatives around cyber intelligence sharing.   How To... Create a basic economic capital model for reputational risk: Alfredo Roisenzvit outlines an economic capital model under trial in Latin America.   Making Sense of the GRC Landscape: David Houlihan outlines the different ways in which current GRC vendor offerings should be considered.   Sharing Scenarios - Significant business disruption through hoaxes: This month’s scenario looks at the potential business disruption impact caused by hoaxes and threats. Find out the results of last month’s scenario benchmarking exercise on inappropriate gifts, contributions or bribery for business ends.   Dear CEO: Every month an anonymous chief risk officer of a financial services firm writes a letter to his CEO detailing some of the issues he has always wanted to raise.   Risk Classifications - Intentional disclosure of confidential corporate information: Mike Finlay takes a look at the deliberate disclosure of confidential inside information for reasons other than identity theft or insider trading.   Classified: Find all your job advertisements here alongside information on upcoming industry events and The Risk Universe monthly comic.

Issue #29

Editor's Letter - Banksters, models and jacks of all trades: The financial services industry is sick, almost in intensive care – what is the cure and can our industry ever recover?   News: Further tales of trader misconduct, fines, new approaches to cyber threats, more on tax evasion and further regulatory investigations.   Of Banksters, Their Molls and the Loot: Who are the winners and who are the ultimate losers in the Russian roulette of modern day banking?   Spotlight - A Jack of All Trades or a Master of none?: The Institute of Operational Risk’s Simon Ashby takes a look at the need for a formal professional operational risk management qualification.   How To... Design an AMA Model: EVMTech draws upon its knowledge and experience to share key issues and concerns relating to designing and implementing capital models.   Crisis? What Crisis?: Proactively establishing a crisis management function is not just prudent, but an essential component of enlightened risk management, according to Peter Power.   Sharing Scenarios - Inappropriate gifts, contributions or bribery for business ends: This month’s scenario takes a look at what appears to be an ever-increasing issue across all industries, namely the payment of bribes and incentives to achieve business ends.   Dear CEO: Every month an anonymous chief risk officer of a financial services firm writes a letter to his CEO detailing some of the issues he has always wanted to raise.   Risk Classifications - End-User developed Application Errors – Model Error: RiskBusiness’ Mike Finlay takes a look at the risk categorisation element of end-user developed model errors.   Classified: Find all your job advertisements here alongside information on upcoming industry events and The Risk Universe monthly comic.

Issue #28

Editor's Letter - Erosion of Trust: Is it surprising, given the ongoing revelations of firms mis-behaviour that financial services are not trusted? What does the industry need to do to change?   News: Market manipulation in various forms, misselling, regulatory investigations and regulation changes continue to dominate the news, with more fines and more cybercrime.   Opinion: Columnist Howard Stein takes a look at modelling operational risk exposure and why, in his opinion, regulators and firms have got it wrong.   Spotlight - Trust in financial services: The Edelman Trust Barometer puts financial services on a par with the media as the least trusted industry sectors.   How To... Establish a Models Register: In certain jurisdictions, it is a prerequisite that firms have an inventory of their models, but it also makes sound business sense to build a models register.   New Approach on Risk Analysis Required for Improved Rail Safety: Operational risk is not restricted to the financial services industry. RiskLogik’s Nick Martyn explores rail safety.   Sharing Scenarios - Mis-selling insurance linked to banking products: This month’s scenario takes a look at mis-selling (and “bundling”) insurance products with banking products, such as the case with PPI.   Dear CEO: Every month an anonymous chief risk officer of a financial services firm writes a letter to his CEO detailing some of the issues he has always wanted to raise.   Risk Classifications - Customer or client property lost or damaged: RiskBusiness’ Mike Finlay takes a look at the erroneous damage to or loss of customer property entrusted to the firm for safe keeping.   Classified: Find all your job advertisements here alongside information on upcoming industry events and The Risk Universe monthly comic.

Issue #27

Editor's Letter - All change, all change...: But in reality, it is more of the same. More investigations into market manipulation, more cyber attacks, more around crypto-currencies, more around money laundering and more inadequate corporate governance.   News: Beyond Libor and forex, now it is also gold and silver; more suspensions of foreign exchange traders; investigations into fraud, money laundering and sanction breeches; cyber threats and crypto-currencies; lawsuits and regulation.   Interview - Nick Leeson: The Risk Universe interviews Nick Leeson, once of Barings Bank, on his views and thoughts on risk appetite and risk tolerances.   Spotlight - Risk culture should equate to business practice: Daiwa Capital Markets' Director and Head of Operational Risk, Alan Dunk, takes a look at embedding risk culture into the business, equating a good risk culture with sound business practice.   How To... Develop a Classification Taxonomy: In today's "big data" age, common language and standardisation in classification is ever more important. Mike Finlay sets out some guidelines and a process to help firms create their own classification taxonomy.   Top operational risks for 2014: Drawing on a survey conducted by The Risk Universe at OpRisk World 2014 and supplemented by a survey of members by ORIC Interanational, a set of 12 exposures have emerged as being of greatest concern to risk managers looking forward over the rest of 2014. Does your list agree?   Sharing Scenarios - Staff industrial action: The month's scenario looks at the potential impacts of staff industrial action. Find out the results of last month's scenario benchmarking exercise on market rate or price manipulation.   Dear CEO: Every month an anonymous chief risk officer of a financial services firm writes a letter to the CEO detailing some of the issues he has always wanted to raise.   Risk Classifications - Internal systems infrastructure or hardware failures: RiskBusiness' Mike Finlay takes a look at a specific form of IT outage caused by physical infrastructure, component or hardware failures.   Classified: Find all your job advertisements here alongside information on upcoming industry events and The Risk Universe monthly comic.

Issue #26

Editor's Letter - Bad behaviour or bad culture?: Operational risk management is first and foremost people risk therefore culture, ethics and human behaviour have to be a prime focus.   News: Eight US banks end parallel run; EU approves increase in rogue trader prison sentences; EU vision for the banking sector; Standard Bank fined £7.6m; OCC issues heightened expectations for large banks; Basel Commitee out with AML sound management guidelines; DOJ fines JPMorgan $614m; Lloyds books another PPI loss; ORIC launches global offering; SFO charges bankers for rate fixing.   Are living wills the answer?: The Risk Universe columnist Annie Searle addresses the issue of “living will” compliance for financial institutions.   Spotlight - Notes on a scandal: As the investigation into manipulation of foreign exchange benchmarks continues to gather pace, Joel Clark examines the allegations that have been made.   How To... Implement a more robust AML programme: Victoria Tozer-Pennington takes a look at how firms can implement a more robust anti-money laundering controls programme.   OpRisk World - Debate, discussion, dialogue: OpRisk World 2014 brought together operational risk professionals from across the globe for dialogue, discussion and debate over the most topical issues affecting operational risk management. The two-day conference involved 25 speakers from the crème de la crème of banking executives, regulators, academics, authors and even a business psychologist.   Dear CEO: Every month an anonymous chief risk officer of a financial services firm writes a letter to his CEO detailing some of the issues he has always wanted to raise.   Sharing Scenarios - Market rate or price manipulation: This month’s scenario looks at the deliberate manipulation of rates and prices. Also find out the results of last month’s benchmarking exercise on unlicensed sales activity.   Risk Classifications - External policy and claims fraud – application and documentation: Classifying external policy and claims fraud – a common insurance risk category and one which is often discounted as a cost of doing business, but which can drain resources.   Classified: Find all your job advertisements here alongside information on upcoming industry events and The Risk Universe monthly comic.

Issue #25

Editor's Letter - A brand new start: January so far has been another month of multi-billion dollar fines for financial services firms, starting with JP Morgan.   News: Failed Madoff oversight costs JP Morgan $2.05bn and criminal charges; SFC issues “pragmatic” report on trends in risk and risk mitigation; HKMA consults on resolution and recovery; Former Rabobank traders face criminal charges; Barclays fined for record keeping failures; RBS Securities Japan fined; RSA Ireland financial misreporting probe; BlackRock analysts surveys banned; Third Wave of Living Wills published in the US.   CCAR and why all the pain is worth it: Evangelos Sekeris, director of operational risk consulting at Aon and former US regulator, shares his thoughts on the Comprehensive Capital Analysis and Review (CCAR), the US Federal Reserve’s annual stress testing exercise.   Spotlight - Would you hire this man?: Victoria Tozer-Pennington investigates whether the UK’s Approved Persons Regime is fit for purpose.   How To... Manage conflicts of interest: Victoria Tozer-Pennngton takes a look at how firms can better manage existing and potential conflicts of interest.   Book Review - A guide to operational risk management: Philippa Girling, currently business chief risk officer at Capital One, is the author of ‘Operational Risk Management: A Complete Guide to a Successful Operational Risk Framework’, a new resource for operational risk professionals that sets out the essential elements of the discipline and addresses fundamental issues such as reputational risk and governance, risk and compliance.   Sharing Scenarios - Unlicensed sales activity in the firm’s own distribution channel: This month’s scenario concerns unlicensed sales activity in distribution channels. Find out the results of last month’s benchmarking exercise on the loss of key staff.   Dear CEO: Every month an anonymous chief risk officer of a financial services firm writes a letter to his CEO detailing some of the issues he has always wanted to raise.   Risk Classifications - Self-dealing or conflicts of interest with clients: RiskBusiness’ Mike Finlay takes a look at conflicts of interest between the firm and its clients.   Classified: Find all your job advertisements here alongside information on upcoming industry events and The Risk Universe monthly comic.