The  Changing  Risk  Landscape  

Sedjwick  Joseph  Chief  Risk  Officer  

Habib  Bank  AG  Zurich  

CCR – 6th Oct 2015

IntroducCon  

Habib  Bank  AG  Zurich  •   Privately  owned  Bank  incorporated  in  Switzerland  in  1967  •   Assets  of  CHF  9.8B  •   Deposits  of  CHF  8B  •   278  Offices  and  6  Subsidiaries  •   Comprehensive  range  of  commercial  &  private  banking  services  and  products  

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Global  Economy  –  Some  Trends  

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While  some  Emerging  Markets  are  growing  at  a  faster  pace  There  is  higher  volaClity  and  higher  risks  

Global  Economy  –  Some  Trends  

OpCons  for  Central  Banks  geXng  limited  Low  Interest  Rates  create  condiCons  for  Asset  Bubbles  

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Global  Economy  –  Some  Trends  

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Serious  Growth  Constraints  Expected  ProducCvity  Improvements  will  not  bridge  the  gap  

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Default  Security  docs.  Collateral.  

Concentra<on  Regulatory.  AML.  

Policies.  

Returns.  Financial  

performance.  

 Liquidity  

requirements  

 Bus  con<nuity  Inadequate  procedures  3rd  party  vendors  

 

System  breaches  or  failures.  IT  security  

Credit

Compliance

Operational

Conduct

Liquidity

Market

Tax & Finance

Reputational

Technology

Financial Crime

Country

Conduct  TCF  

Monitoring  

Forex.  Interest  rate    

Nega<ve  publicity  

Financial  Crime  –  

Internal  &  External  

Country  transfer  risk  –  

mee<ng  commitments  

MulCplicity  &  Interconnectedness  of  Risks  for  Banks  

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IRRBB  

LCR  SMR  

IFRS  9  EL  

Basel  IV  

COREP  CRD  IV  

Cyber  Security  

Emerging  Risks  &  Issues  

Regulatory  

Opera<onal  

Strategic  &  Financial  

Credit  

Market  Disruptors  

Misconduct  

Rise  in  Interest  Rates  

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Credit

Country

Financial Crime

Reputational

Tax & finance

Market

Liquidity

Conduct Operational

Compliance

Technology

Impa

ct

Likelihood - The size of the bubble represents a combination of historic actual & potential future losses - Chart for illustration purposes only

Sizing  the  Risks  

Enterprise  Risk  Management  

Tradi<onal  Risk  Management   Enterprise  Risk  Management  

Risk  Management  driven  by  Historic  Events   Driven  by  both  by  historic  and  forward  looking  

Downside  Risk  Management   Managing  Downsides  and  Opportunity  

Focus  on  fewer  Risks   Focus  on  MulCple  &  Emerging  Risks  

Risk  miCgaCon   Risk  opCmisaCon  

TacCcal  –  Short  Term  Management   Strategic  -­‐  Longer  term  Management  

“Silo  like  Risk  Management”   “CollaboraCve  Risk  Management”  

Key  differences  between  Tradi1onal  Risk  Management  and  ERM  

Enterprise Risk Management Not a Panacea But

Provides a framework for Managing in the Changing Risk Landscape

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ExecuCon  

Decking  the  resources  •  Number  of  FTE  •  Skills  of  FTE  •  Senior  Management  Cme    Aligning  Business  Strategy  and  Policy    Ac<on  Plans  to  mi<gate  risks  and  clear  ownership  

Cascading  Changes  and  Embedding  in  the  Organiza<on            

There  is  No  Alterna<ve  To  A  GRIND  

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Emerging  Risks  and  the  Unknowns  

Constant  emergence  of  new  risks    What’s  relevant    Managing Blind spots  The  UNKNOWN                    

The  Power  of  A  TEAM  

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Internal  Audit  

The  3  Lines  of  Defence  

Risk & Control is Key But

Clear segregation is giving way to seamless interaction

The  Changing  Role  of  the  CRO  

Downside  Risk  Management  •  Mi<gate  Risks  •  Minimise  Losses    Uncertainty    •  Minimising  Vola<lity  •  Managing  Surprises    Opportunity  •  Op<mising  the  Upside  •  Stakeholder  Management            

Cri<cal  Member  of  the  C-­‐Suite  

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Stakeholder  Management  

•  Data  &  Analy<cs  in  isola<on  alone  won’t  work  

•  Working  in  a  SILO  won’t  work  

•  Denying  Organisa<on  POLITICS  won’t  work  

•  A  Mul<tude  of  Stakeholders  is  a  REALITY          

Enabler  of  Business  while  maintaining  Independence    &  Providing  Challenge  

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Key  Takeaways  

 From  the  LeY  Brain  to  the  LeY  &  Right  Brain  Balance      Management  of  Mul<ple  &  Emerging  Risks      Balancing  Downside  Risks,  Uncertainty  and  Opportunity  

 

   

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Thank You

Q&A

Sedjwick  Joseph  Chief  Risk  Officer  

Habib  Bank  AG  Zurich  The  Changing  Risk  Landscape  

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