CISI Risk - Chapter 9 Flashcards
Who is responsible for the day to day running of the company?
Board of directors
7 Responsibilities of the board of directors
Financial Oversight
Companies approach to risk
Culture setting
Monitor companies exposure to risk
Identify risks inherent in companies business model
Oversee effectiveness of management
Effective crisis management
3 Responsibilities of the risk committee
Ratify the key policies
Effectiveness of these policies
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 controlling of all risk types
What two things does the risk committee determine?
Amount of financial risk
Amount of non-financial risk
How frequently does the board approve the firms risk appetitie?
Yearly
What does the CRO (Chief Risk Officer) have the authority to do (3)
Make decisions on the risk committees behalf
Set business level risk limits
Approve risks above limits
What 3 other things is the CRO responsible for?
Firms risk management strategy
Risk polices and methodologies
Firms infrastructure can support its risk management objectives
What is the first line of defense
Business Management
Who is responsible for the first line of defence?
Day-to-day operations
What is the second line of defense
Independent risk function
Who is responsible for the second line of defence?
Independent risk functions (Including Compliance)
What is the third line of defense?
Internal Audit
Staff in controlled functions must be what?
Approved by the FCA
What are the three key challenges to implementing risk governance structure
Appropriate autonomy and authority
Seg of duties
Relationship of risk managers to business
Key policies - What is Ownership and Management
Individual Accountability, eg Senior Management and SMCR
Key policies - Staff remuneration policy
Staff pay
Key policies - Staff Appraisal
Is risk management being made a priroty?
Key policies - Risk policy
Comprehensive enough to cover all risks?
Key policies - Risk functions and independence
How independent is the head of risk?
Risk policies - Escalation and whistle-blowing process
Clearly defined to allow staff to easily report misconduct
Risk policies - Caliber of risk personal
How much is a firm willing to pay for high caliber personal
Risk policies - Code of conduct
What ethics are to be followed by all staff?
7 Things that should be publically disclosed according to Principle 12 of the BIS
Board structure
Ownership structure
Organizational charts
Incentive structure
Code of business conduct
Conflicts of interest policy
Risk management policy
What risk would poor management of integrity, ethics and social responsibility induce?
Reputational
What is the “Silo Effect”
Staff only being concerned with their own area because of a lack of shared vision throughout the organisation
What is a moral hazard?
The idea that staff will become careless of risks as they are are safety nets in place
Which line of defense would compliance fit into?
Second Line
Are u gonna pass
Yes
