Chapter 9: Risk Oversight and Governance Flashcards
what areas do the board’s risk responsibilities cover?
- providing proper financial oversight
- determining company’s approach to risk
- setting and instilling the right culture
- monitoring exposure on risk
- identify risks inherent in the business model
- overseeing effectiveness of management mitigation processes
- ensuring effective crisis management process
what is the role of the risk committee?
- ratify key policies
- monitor effectiveness
- translate overall risk appetite of the firm
what is the risk management committee of the board responsible for?
independently reviewing the identification, measurement, monitoring and control of all risk types
what is the structural risk framework?
mechanisms that enable the board intentions in relation to risk to be propagated throughout the firm
what does the board do in terms of approval and authority to risk?
- board approves the firms risk appetite each year
- board delegates authority to oversee risk to the risk committee
what is the CRO responsible for?
Chief Risk Officer
- risk management strategy
- risk policies and methodologies
what are the three lines of defence for risk management?
- business management
- independent risk functions
- internal audit
what do risk managers do?
- enable risk takers to communicate downwards
- measure and report risk within the right structure
what must risk governance implementation need to take into account?
current governance structure
what are the main factors that determine a firms risk and control culture?
- ownership and involvement
- governance and policies
- risk appetite and tolerance
- transparency
- integrity
- education and development
- moral hazard
