Wednesday, 11 January 2012

Risk Appetite Statements - Central Bank of Ireland not impressed

Good spot from Mike Claffey, flagging an finance industry-wide rollicking from the Central Bank of Ireland on the quality of Risk Appetite Statements, now of course a regulatory requirement.

Some extraordinary findings appear to have emerged, judging by the recommendations, for example;
  • Board not signing off the appetite statement (never mind just signing off, how about formulating!)
  • Non-coverage of material risks
  • Statement not being communicated to relevant staff
With the advent of PRISM in 2012, there is clearly a desire to get ducks in a line on the Emerald Isle, and of course there is plenty of Risk Appetite guidance out there (some from Mr. Claffey himself at Milliman here, the IRM's take here, the Society of Actuaries in Ireland had a good stab here, but strangely nothing extensive on the FAQ front from the CBoI). Fair to say that excuses should be hard to come by then?

However, as I have mentioned earlier, having some paper perfect statements doesn't necessarily deliver the right outcome, as UBS will attest to!

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