Week14_Journal
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Chapter1314Slides.pptxITS 835 enterprise risk management Chapter 13 & 14
ERM – TD Bank & Zurich Insurance Group
University of Cumberlands
1
Chapter 13: TD Bank
Headquartered – Toronto Canada
2nd largest in Canada & 10th largest in US
85,000 Employees worldwide
Provide Financial Products and Services
22 Million Customers in the following business lines:
Canadian Retail
Wholesale Banking
US Retail
$896 Billion
University of Cumberlands
2
ERM at TD Bank
Enterprise Risk Framework (ERF)
Nature of the risks to TD’s business strategy and operations
How TD defines types of risks
Risk management governance
TD manages risk through processes that identify, measure, assess, control and monitor risk
Risk Appetite
How risks are viewed and what risks to take to grow business
Take risks to build business only if risks
Fit business strategy and can be understood and managed
Do not expose the enterprise to any significant single-loss event
Do not risk harming TD brand
University of Cumberlands
3
TD bank organizational risk
Strategic Risk – potential loss or reputational damage
Credit Risk – Most significant; payment agreement among parties fail
Market Risk – loss in financial instruments or balance sheet due to market factors
Liquidity Risk – Insufficient cash or collateral resources to meet financial obligations without raising funds
Operational Risk – loss from inadequate or failed internal processes
Insurance Risk – loss to insurance factors based on the market
Legal, regulatory and compliance Risk – risk of negative impacts to business activities
Capital Adequacy Risk – Risk of insufficient capital available compared to capital required to complete business goals
Reputational Risk – potential of stakeholder’s impressions based on business practices, activities, etc.
University of Cumberlands
4
TD bank risk governance structure
Business owns all Risks generated and responsible for accessing risks
Design
Implement Controls
Monitoring and Reporting
Members
Senior management committee
CEO and Senior Executive Team
Chief Risk Officer (CRO)
3 Lines of Defense model
Business and corporate line
Setting standards and challenging business assumptions
Independent assurance
University of Cumberlands
5
TD bank risk management processes
Risk Identification, Assessment, and Reporting
Recognize and understand existing risks from new or revolving business activities
Risk Measurement
Quantify risks
Risk Control
How risks are handled through processes
Risk Monitoring & Reporting
Dashboards, Scorecards, Reporting
University of Cumberlands
6
TD bank - conclusion
ERM framework to mitigate risks
TD Bank Risk Appetite
Governance Process
Risk Management Process
University of Cumberlands
7
Chapter 14 – Zurich insurance group
Large global insurance company
10 years using ERM to remain profitable
60,000 employees
Customers in over 170 countries and territories
Capitalize on market opportunities
Tangible Results
Optimizing Risk and Rewards
Risk Culture
University of Cumberlands
8
Zig – erm framework
Governance process with clear responsibilities for taking, managing, monitoring and reporting risks.
Foster transparency through risk reporting standards
Risk governance approach with three lines of defense
Business or functional areas
Group Risk Management
Independent internal audit functions
Documented policies and guidelines
Remuneration Program
Risk policy
University of Cumberlands
9
Zgi – cro and risk management group
CRO leads Group Risk Management Function
Oversight of Risks
Group Risk Management Function develops methods and processes for identifying, measuring, monitoring and reporting risks throughout Zurich
Two centers of expertise: risk analytics and risk and control
Network
CROs of Group’s segments and regions and LROs of business units and functions
Audit an Oversight Committee at business and regional levels
Board-level risk committee and executive risk committee
Emerging Risk Group
External Stakeholders
University of Cumberlands
10
Zgi – tools and erm framework
Methodologies and Tools to Manage Business Risk
Total Risk Profiling Tool
Workshop-approach based where facilitated teams evaluate risks
Hazard Analysis Tool
Manage risks by identifying, addressing and managing risks
Risk Room
3-D room to help address risks using a statistical assessment
University of Cumberlands
11
Zgi – types of risks
Strategic Risks
Unintended risks resulting in product of planning or strategy execution
Insurance Risks
Uncertainty regarding occurrence, amount, and timing of insurance liabilities
Market Risks
Balance sheet positions affecting cash flows of the market
Credit Risks
Loss or potential loss from financial obligation outcomes
Liquidity Risks
Insufficient liquidity to meet obligation resulting in excessive costs
Operational Risks
Risks impacting business operational activities
Reputation Risks
Impacts on people, process, systems and events
University of Cumberlands
12
Zgi – capital management & tools
Economic Capital Model
Measures and Quantifies Risks
Uses Strategic Planning Processes
Analysis of Capital Adequacy
Relationships with Global Agencies to help maintain credit rating
Business Resilience Tools to Create Value
Business Interruption Modeling
Supply Chain Risk Assessment
Business Continuity Management
Six-Stage Business Continuity Management Life Cycle
University of Cumberlands
13
Zgi - conclusion
ERM Program
ERM Committee
Capital Management Methodologies
Tools for Creating Value
University of Cumberlands
14
