1 / 12

Enterprise Risk Management Organizational Structure

Enterprise Risk Management Organizational Structure. Presentation to the RMC. February 26, 2007. Table of Contents. Linking the Organization to our ERM Objectives. 1. 2. What do we need from the RMC?. 3. Appendix. Linking the Organization to our ERM Objectives.

bentleyb
Download Presentation

Enterprise Risk Management Organizational Structure

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Enterprise Risk Management Organizational Structure Presentation to the RMC February 26, 2007

  2. Table of Contents • Linking the Organization to our ERM Objectives 1 2 What do we need from the RMC? 3 Appendix

  3. Linking the Organization to our ERM Objectives • Ensure ERM Program aligns with the global ERM initiative. • Establish a communication, escalation and reporting structure to “Get the right information, to the right people, at the right time, to make the right decisions.” • In the following slides, we illustrate 5 alternative organizational structures for use in our NA ERM initiative. • We recommend that the RMC endorse Organizational Structure 4. • Note: Organizational Structure 4 received majority support from six RMC members at the LORM meeting on February 21, 2007. These same RMC members will be asked to vet the new ERM Committee Charter.

  4. How do we get there? Structure 1 Structure 2 Structure 3 Structure 4 Structure 5 Advisor to RMC Intermediate Decision-making body Reporting as a Subsidiary to the RMC Reporting into LORM / Other Subcommittee Current State New Structure √ X √ √ √ Decision-making X √ √ √ √ • No separate, stated mandate for ERM. • Identifies future risk trends by reviewing results from Risk Outlook Process. • Monitors enterprise-wide risks. • Responsible for escalating key risk issues to the RMC for attention and decisioning. • Identifies future risk trends by driving Risk Outlook Process. • Monitors enterprise-wide risks. • Responsible for identifying key risk concerns for RMC attention and decisioning. • Controls risk by acting as senior risk committee. • Identifies future risk trends by driving Risk Outlook Process • Monitors enterprise-wide risks. • Responsible for identifying key risk concerns for RMC attention and decisioning. • Controls risk by acting as senior risk committee. • Identifies future risk trends by driving Risk Outlook Process • Monitors enterprise-wide risks. • Responsible for identifyingand escalating key risk concerns for LORM attention and decisioning. • Mitigates risk. Mandate Membership • Modeled Risk Owners • RMC members • One representative from each RMC member (GSVP level or above) • Modeled Risk Owners, • Audit, Compliance, Legal, HR, Finance (at GSVP level or above) • Existing LORM members

  5. Structure 4: Reporting as a Subsidiary to the RMC Description: This structure represents ERM as a new committee or reporting subsidiary of the RMC. This body would be similar to Structure 3 in constituency but different in terms of organizational structure placement. Compliance Committee Local Operational Risk Management Asset and Liability Committee Branch and Agency Network Risk Policy Committee Credit Committees Enterprise Risk Management Advantages • Simple to understand structure. • At this organizational level, members may represent “practitioners.” • Highly visible in the organizational structure. • Does not introduce a high level of bureaucracy. • Avoids introduction of new Task Forces. Disadvantages • New decision-making structure. • Negotiate information inflows from other groups. • May lack requisite power to affect transformation. FOR: Structure 4 provides the best organizational fit and meets our regulatory commitment. Note: This is not an exhaustive list of RMC Subcommittees.

  6. Table of Contents • Linking the Organization to our ERM Objectives 1 2 What do we need from the RMC? 3 Appendix

  7. What do we need from the RMC? • Agree and endorse ERM Organizational Structure 4 What the RMC should expect... • Develop ERM Charter (to be approved by RMC) which will promote the control (defensive) and the strategy (offensive). • Assign members and roll-out new Committee structure.

  8. Table of Contents • Linking the Organization to our ERM Objectives 1 2 What do we need from the RMC? 3 Appendix

  9. Structure 1: Current State Description: This structure represents the current state (i.e. there is no change to the organizational structure. Instead, ERM is a primary responsibility of the RMC and its members. Therefore, an additional committee is not necessary. Advantages • Status quo • RMC members possess the requisite expertise needed for ERM. • Elevating the responsibility for ERM to the RMC level should promote a high level of visibility andcommitment. Disadvantages • Crowded RMC agenda. • No pre-vetting or analysis of data. AGAINST: Structure 1 may require numerous Task Forces and may not meet our regulatory commitment. Note: This is not an exhaustive list of RMC Subcommittees.

  10. Structure 2: Advisor to RMC Description: This structure represents ERM as an advisor to the RMC. This structure is similar to Structure 1. However, the ERM Advisors do not have to be the same constituency as the RMC. ERM Advantages • Competent professionals. • Shapes the RMC • No new committee needed. • No decision-making authority needed. Disadvantages • New structure. • No decision-making authority. AGAINST: Structure 2 lacks impact and will not meet our regulatory commitment. Note: This is not an exhaustive list of RMC Subcommittees.

  11. Structure 3: Intermediate Decision-Making Body Description: This structure represents ERM as an intermediate decision-making body to RMC. This structure establishes a new committee which sits above all other committees and shapes agenda, reviews status and escalates issues to the RMC. Advantages • By elevating the ERM structure above other Risk, Compliance and Finance Committees, ERM can address cross functional risk issues. • Enterprise-wide view of risk. Disadvantages • New decision-making structure. • Boundary issues may arise with RMC and subsidiaries. • RMC may disengage and delegate authority. AGAINST: Structure 3 may not provide us the best organizational fit. Note: This is not an exhaustive list of RMC Subcommittees.

  12. Structure 5: Reporting into LORM / Other Subcommittees Description: This structure represents ERM as a sub-committee reporting into LORM or Other Subcommittees (e.g. Credit Policy or ALCO). The constituency may change under this model as there may be a tendency to focus more on the type of risk governing the Subcommittee (e.g. operational risk) rather than other types of enterprise-wide risk issues. Advantages • Utilize existing structure. Disadvantages • Reporting into LORM, the ERM Committee may not have the capacity to focus on other risk issues. • Specialization may be deep but lacks breadth. • Risks other than Operational Risk may not be adequately covered (e.g. Market and Credit Risk, Compliance, ALCO). AGAINST: Structure 5 lacks impact and will not meet our regulatory commitment. Note: This is not an exhaustive list of RMC Subcommittees.

More Related