Risk Assessment and Compliance Management

Risk Assessment and Compliance Management

Financial Industries

Executive Summary

Today financial services companies operate in increasingly complex, competitive and global markets. The ability to manage risks across geographies, products, asset classes, customer segments and functional departments is of paramount importance. The inability to manage these risks can cause irreparable damage. Convergence, consolidation, globalization and shifting regulations have posed innumerable and hitherto unprecedented challenges for the financial services industry.

JAT Risk Solutions believes that the new standards will require sizable investments in information technology and process re-engineering. This will be particularly true of larger institutions that have complex organizations and have shown a stronger appetite for risk. JAT Risk Solutions predicts that investment in comprehensive technology developments and supporting processes for risk management in the financial services industry will outpace other information technology spending and will amount to an estimated total of US$21 billion in 2005.In addition to enhancing traditional risk management systems, the financial services industry will have to align their IT investments and operational processes in a manner that maximizes business value by reducing capital requirements and lowering the overall exposure.

JAT Risk Solution’s objective for each client is to define the major risks from the perspective of financial services industry, the interdependent components of Enterprise wide risk management and the joint role of technology and their supporting business unit processes in risk management. JATRS risk management assessments include the qualitative and quantitative sides of risk management and defines a risk management framework based on how both these aspects exist and are depended upon in each unique client environment.

Financial Enterprise Risk Management:

JAT Risk Solutions’ financial enterprise risk assessment and management processes and services is about optimizing the client’s process with which risks are taken and managed.

As financial services firms adopt new product lines, enter new markets and lose the protection of traditional industry barriers, identifying, classifying, and managing risk has become a major concern and new corporate responsibility. In today's financial markets, many firms offer products and services that cross what had once been traditional boundaries. The new products and services are supported by new systems and applications that are processed internally or outsourced to a variety of processors. This variety of processors is composed of tested, mature and well managed public companies as well as untested new entreprenural enterprises. Their control practices over systems development and operations are equally untested and not mature. Past decisions by management to engage in new products and services has always encouraged management to diligently obtain information on the practices of the supplying vendors. Today, under newly outline requirements of the Public Company Accounting and Oversight Board (PCAOB), the SEC, the International Accounting Standards Board, the Institute of Internal Auditors, and the AICPA what was encouraged is now fundamental and required. Additionally, federal regulators of banking, investments and brokerage services have declared controls and risk management as the most critical processes within the organizations they examine. Thus, the needs of management, their boards of directors, CEOs, CFOs and CIOs are searching for the most cost effective processes to ensure compliance. Many financial corporations took aggressive action to comply only to later determine that their definition of key risks and controls further complicate their ability to comply. They simply identified key controls that are not key in the process of financial reporting and as a result, they must now manage an unreasonable volume of controls. Due to the difficulty in managing to the volumes of controls exceptions, both important – materially and unimportant are being reported.

JAT Risk Solutions reflects experience in more than 40 Sarbanes-Oxley risk assessment engagements.

To address the identification and on-going management of such wide-ranging risks based on non-standard definitions, management of financial services firms have determined that a second, objective analysis of the risks and controls initially identified is necessary to properly classify key controls and critical risks. From this analysis, financial, operational, regulatory and reporting risks and controls may be more effectively assessed and managed. Without lowering the threshold of regulatory and professional best practice compliance JAT Risk Solutions expert risk assessment establish standard definitions, ownership, order and control to the company’s risk management process.

To help identify those practices, JAT Risk Solutions assigns risk and control experts with substantial knowledge of financial, operational, technological and regulatory best practices and laws to analyze and proper define, assess and manage the current risk systems and processes of commercial banks, investment firms and insurance companies.

Fraud Detection

Effective internal controls can be overridden by management in every entity. How an Audit Committee, or management detects and deters management overrides is critical to reducing the opportunity for fraud and limiting exposures to loss. JAT Risk Solutions Certified Fraud Examiners provide the tools and techniques needed to combat fraud and to ensure the Board, the Audit Committee and management are properly addressing and managing this critical component of risk. JATRS’s solutions-driven program begins with listening to our clients, gaining input and guidance from your leading experts. With our exceptional level of experience in audit, fraud investigations and mitigation, we implement reliable and sustainable management processes that reduce the likelihood of fraud and provide management the ability to detect and act upon issues and concerns properly and uniformly.

Types Of Risks Assessment and Service Areas:

Operational
Legal
Market
Regulatory
Financial
Business Continuity
Corporate Governance
Business strategy alignment to the corporate risk policy.
Business transaction Risk
Risk transfer and avoidance strategies, policies and standard processes
Risk Analytics for consistent quantification and management of market and operational risks
Data and technology risk and related resource aggregation
Standards and processes to improve the quality of data

Deliverable:

An entity and business level Risk Management Framework and Process for a consistent firm-wide approach.

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