Stay Ahead of the Risk - Actuaries Institute · Landscape is becoming increasingly complex…....
Transcript of Stay Ahead of the Risk - Actuaries Institute · Landscape is becoming increasingly complex…....
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Stay Ahead of the Risk
Narelle Pyne Origin Energy
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Landscape is becoming increasingly complex….
Turnbull Report COSO & COBIT
Barings Collapse
LTCM Collapse
Sarbanes Oxley
Terrorist activity Enron
Pressure Groups Green Issues
Basel Carbon Tax
Eurozone weakness
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What do you need to stay ahead?
A structured approach to managing uncertainty.
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Enterprise risk profile of RBS Group (2007)
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Snapshot of RBS Group (2007) • 50 brands • 71 businesses • 25 countries • 198 countries that we fund other businesses operations • At least one thousand products • 140,400 members of staff • 22 payments systems • 102 new pieces of legislation or regulation • 254,000 reported frauds in 2004 • 6 acquisitions in 2004 • 49 staff changes within the enterprise risk community
alone
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Bank Top Risks – 2007
1 Damage to reputation 33% 2 Market Risk (financial) 88% 2 Employee Dishonesty 88% 4 Loss of data 100% 4 Market environment 43% 6 Third Party Liability 50% 6 Regulatory / legislative changes 83% 8 Interest rate Fluctuation 100% 8 Counter party credit risk 80% 10 Directors & Officers personal liability 75% 10 Computer viruses / malicious codes 100% 10 Technology failure 75%
Source: AON Global Risk Survey 2007
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3. Reputation
Perception is reality
All encompassing
What is Reputation?
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Yes!
Can you damage reputation?
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All encompassing
Perception
At the most basic level by failing to meet expectations
Company
Implicit and explicit
contracts of trust
Employees Interest Groups
Regulators
Investors Public/ Media Customers
Suppliers Government
Stakeholders
Conflicting interests and expectations
How do you damage your reputation?
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The Reputation ‘Touch Points’
1. By the way we conduct ourselves as a business;
2. By the we way we transact with our customers – through the selling of financial products and services; and
3. By our association with our customers.
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Banks sell loans to vulnerable Some High Street banks are mis-selling loans to the sick and vulnerable, evidence obtained by the BBC has shown.
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Staying ahead – what we did....
• Perception
Perception
•The Reputation Risk Policy was issued in January 2006. The Policy of the Group, as a prudent and responsible financial services provider, is to establish and maintain systems and procedures, providing management with reasonable assurance that the Group will not enter into a relationship or transaction where:
- the transaction or business activity being conducted by the prospective customer is not legal. - is not commercially viable. - the transaction or customer relationship would put the reputation of the Group, or any part thereof, at risk.
•Linked to key business processes across the Group.
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Different industry, location and risk profile
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Snapshot of Origin • Origin is the leading Australian integrated energy company • ASX Top 20 by market capitalisation • Operations span across the energy supply chain; from gas exploration and
production to power generation and energy retailing • 5,800+ employees • 150,000+ shareholders • 52.8% interest in Contact Energy • 4.3 million gas, electricity and LPG customers across Australia • Market leading green energy retailer • 5,900 MW owned or contracted generation capacity
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Energy Top Risks
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Staying ahead – what we did.... • Evaluated inherently high risk factors across the company that
could lead to or result in fatality or permanent disabling injury.
• Reviewed approximately 38,000 incidents and observations over a 2 year time period.
• Utilised industry guidance publications and industry examples to frame the development approach.
• Endorsed by Origin’s Executive Management Team.
• Company wide launch of the Life Saving Rules.
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Origin’s Life Saving Rules
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Governance is all about a company ensuring that its business is properly controlled. The same key elements of corporate governance apply to all companies, large and small, irrespective of industry:
•a suitably constituted Board or governing body; •clear roles and responsibilities for the business leaders, with appropriately delegated powers; •a robust high level control framework; and •appropriate and timely management information.
The common ground
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Where to from here?
Source: Global Risk Management Survey 2013, AON Risk Solutions