©LogicaCMG plc 2005 1 Making Compliance Pay Ian Larkin Head of Risk and Compliance LogicaCMG UK...
-
Upload
morgan-anthony -
Category
Documents
-
view
219 -
download
1
Transcript of ©LogicaCMG plc 2005 1 Making Compliance Pay Ian Larkin Head of Risk and Compliance LogicaCMG UK...
1©LogicaCMG plc 2005
Making Compliance Pay
Ian Larkin
Head of Risk and Compliance LogicaCMG UK
FICCI-IBA Conference5th October 2005
2©LogicaCMG plc 2005
Regulatory Compliance
The harsh reality is:
• Cost of regulation is huge
– Implementation, then operation & maintenance
– £200m for a Tier 1 bank, £1bn in 2005 for B2 across Europe
• Aim for minimum acceptable compliance
– Minimizing spend, cutting scope
• Regulatory programmes are “siloed”, despite overlaps
– Minimizing the project dependencies
– Little coordination, few synergies, multiple hits
• Compliance causes business and strategic disruption
– Delays strategic business programmes
– Impacts business as usual Is a rubber stamp the only benefit?
3©LogicaCMG plc 2005
An Alternative Strategy
Regulatory compliance is not just an overhead - it should add value!
so…
Don’t do it because the regulator says so;
do it for business benefit,
and comply “en passant”.
4©LogicaCMG plc 2005
Two ends of a spectrum
– Disparate projects to cost, implement & manage
– No strategic overview
– “Do what we must”
– Back-pressure
– Repetition of work
– Resource intensive
– Co-ordinated strategic approach
– “Compulsory spend – use it wisely”
– Business gain costs less!
– Progressive, incremental development
– Optimal economic capital allocation
Minimum compliance Benefit-based
5©LogicaCMG plc 2005
Some quotes
Woolly or wise?
– “We don’t want MI to provide information internally – only to send reports to satisfy the regulator!”
– “We are not spending anything on Basel II! We are enhancing our Credit Risk system, which will be Basel compliant.” (Tier 1 Head of Risk)
– “We see B2 as giving us the opportunity to develop risk-based pricing for our retail customers.”
– "Spending on Sarbanes-Oxley is an upfront investment in making the processes of the company better," says BP’s Macdonald. "We don’t view it as an intolerable burden.”
6©LogicaCMG plc 2005
How to get some benefit…
• Re-use information & systems
• Sox process maps B2 OpRisk
• AML analysis CRM
• Stress testing risk navigation
• Use aggregated information
• Counterparty exposure limit utilisation, sales authorisation
• Shared statistics model calibration, benchmarking
• Use consistent metrics
• Enterprise Compliance Data Management
• Comparative risk measures risk-adjusted returns
• Finance & Risk Integration
7©LogicaCMG plc 2005
Managing Compliance Data
Paper
ProductionSystems
Datamart, calc & reporting
Step by step• Map existing models to Metamodel• Migrate extracts to ETL• …..
EnterpriseDataWarehouse
Paper or XBRL
ProductionSystems
StagingServers
DataMart
Basel II
IASPSB, SarbOxFraud, AML
Credit Risk &Op Risk
MetaDataData definition, Lineage
Config MgtVersioning, dev & prod, time stamp
ReportingEngine
Stovepipes
8©LogicaCMG plc 2005
Enterprise Compliance Data Management
C’ptyData
EnterpriseDataWarehouse(logical or physical)
Regulatory(Paper or XBRL)
ProductionSystems
StagingServers
DataMarts
Basel II
IASPSB, SarbOxFraud, AML
Credit, Market,Ops, ALM…
MetaDataData definition, Lineage
Config MgtVersioning, dev & prod, time stamp
ReportingEngines
Key Benefits• Enterprise risk management• Compliance with SarbOx• Single extract, single clean up• Easier reconcilation• Reduced storage• Consistent business reporting
MktData
Risk MIS
RiskEngines
Transports
9©LogicaCMG plc 2005
Beyond Basel II – Adding ValueB
enefi
ts a
nd im
ple
menta
tion c
om
ple
xit
y
Regulation
Economics
Adding Value
Basel II
Internal Ratings-Based Approach
Risk Adjusted Pricing
Based on IRB
Active Credit Portfolio Mgt
with
Front & Back-End Steering
Typical Implementation Sequence
10©LogicaCMG plc 2005
Steering the OrganisationC
usto
mers
Secon
dary
Mark
ets
Back OfficeProduct Processing
OriginationActivities
Active Portfolio Management
Secondary Mkt.Products
AccountManagement
Credit RiskManagement
Syndication
CreditDerivatives
StructuredDeals
Insurance
CreditPortal
CentralPortfolio
ManagementUnit
Secondary Market Mgt
Front-End SteeringFront-End Steering Back-End SteeringBack-End Steering
11©LogicaCMG plc 2005
Making Compliance Pay
In summary…
• Manage your enterprise compliance data
• Re-use compliance systems for business benefit
• Implement economic measures of performance
• Work towards maximizing the value of the enterprise
Ian N. LarkinHead of Risk & ComplianceLogicaCMG UK
[email protected] +44 (0)20 7446 5150
mobile +44 (0)7802 462 067
12©LogicaCMG plc 2005
Who are we?
Logica cm… who?
• LogicaCMG has implemented RTGS for RBI, nation-wide• LogicaCMG is a major international force in IT services to
clients across diverse markets • We provide management and IT consultancy, systems
integration and outsourcing services• Formed in December 2002, through the merger of Logica
and CMG, the company employs around 20,000 staff in offices across 34 countries
13©LogicaCMG plc 2005
Contact…
Nath ParameshwaranBusiness ManagerFinancial Services - South AsiaLogicaCMGExpress Tower3rd FloorNariman PointMumbai - 400 021India
Tel +91 (22) 5635 2984Mob +91 98203 15084Email [email protected]
14©LogicaCMG plc 2005
LogicaCMG has taken reasonable care to ensure that the information contained herein is correct at the time of publication. Before using or relying on any content in this presentation, independent verification should be obtained. LogicaCMG accepts no liability nor responsibility for any use of or reliance upon the content of this document.