We help clients design and implement integrated risk-management solutions and bring a risk-reward perspective to strategic decision making and day-to-day operations. Show
Many risk-management activities at the enterprise level are influenced by various types of pressure. Some are external, such as compliance or regulatory changes, for example. Sometimes, unfortunate events in one’s own company or in the industry prompt internal soul searching regarding whether existing risk-management approaches are adequate. In more and more cases, however, CEOs and business leaders take a more proactive stance, as their goal is to further develop risk-management capabilities (proactively based on their strategic and economic priorities and growing aspiration levels) into a true competitive advantage—ultimately improving business decisions and increasing the value of the company in a risk-conscious way. We have worked with clients in many different industries, including finance, energy and basic materials, automotive, pharmaceuticals, infrastructure, logistics, and travel. We have also assisted public entities, as many of them are increasingly aiming to improve their enterprise-risk-management (ERM) capabilities. Our recent work includes supporting clients in targeted initiatives for upgrading ERM capabilities. Economic crises motivated our clients to work on stress testing and rapid-recovery programs. Natural or operational disasters resulted in the creation of effective crisis-response projects. Far-reaching regulatory and supervisory actions triggered work to articulate strategic risk appetite and strengthen internal-control frameworks. We have also supported our clients in large and broad multiyear ERM transformation programs in order to build the ERM capabilities that are necessary for an institution to thrive in a new economic, competitive, and regulatory environment. We focus on strengthening the structural elements of ERM, including the link between risk and strategy, for example, in identifying and managing M&A or capex risks; the impact of risk-return on portfolio management, and sometimes, portfolio “de-risking”; and the strong link between risk and financial management, such as in balance-sheet management. Many boards and CEOs have asked us to discuss risk governance as it relates to their companies, including the roles and involvement of the board and the CEO in risk management. Also, many of our projects now focus on ensuring that ERM is implemented in and across an organization, including within a company's culture. Our systematic approach to ERM focuses on five dimensions, each of which is substantiated with industry-specific diagnostics, benchmarks, and best-practice recommendations: Risk-return transparency and insightWe help our clients identify, quantify, and prioritize their most important risks as well as related returns. We do this using a combination of advanced quantification methods (such as analytic modeling and stress testing, also using nontraditional data sources) and the systematic integration of qualitative factors, including business-management judgment. To complement statistically validated approaches, we integrate forward thinking, especially in risk measurement and management reporting. In close cooperation with our Business Technology Office, we advise our clients on appropriate data and IT solutions. As a result, our clients gain a clearer perspective of their most important risks and the related returns, as well as on the structure of their portfolio of risks and how they can use insights in order to improve strategic, financial, and operational decision making (for example, on risk mitigation, portfolio adjustments, contracting or risk based pricing). Risk ownership and strategyCompanies should choose consciously what types and levels of risk to take and what to avoid and mitigate (“risk ownership”). We help clients gauge their unique strategic, financial, and operational circumstances (“risk bearing capacity”) in order to ensure that their risk choices are aligned with their strategy and with their financial and operational risk-taking capabilities (“risk strategy and risk appetite”), so that they can optimize the risk-return trade-off. Risk-enabled decisions and processesWhen making important strategic, financial, and operational decisions, decision makers must consider risks related to information and associated trade-offs. We support our clients in integrating risk-return-related considerations into important decisions in M&A; routine processes, such as planning and capital allocation; and daily frontline transactions, such as contract structuring and pricing. We pay particular attention to ensuring sound risk reporting, monitoring, and control processes. Risk governance and organizationEveryone in an organization has some responsibility in managing risk across the organization, not just the chief risk officer. Shareholders, rating agencies, and regulators and policy makers request that companies involve their top management and even their boards. However, the right structural and organizational choices, the description of roles and responsibilities, as well as the appropriate definitions of organizational units and reporting lines, are critical to ensuring robust and effective enterprise-risk management. We help clients define overall governance as well as the organization of the relevant risk, finance, and other control functions, and determine how they should interact with one another and other parts of the organization. Furthermore, we provide granular benchmarks on the appropriate size of and cost for different risk and control units. Risk cultureMind-sets and behaviors of individuals and groups inside the organization—and not only the risk organization—play a crucial role in the execution of a company’s enterprise-risk-management strategy. We have developed a proprietary approach to risk culture that, for the first time ever, allows for the creation of a specific and detailed description of the core elements of a company´s risk culture, an analytical approach toward measuring and profiling that culture, overarching industry-specific benchmarking, and the identification of specific levers for actively influencing and developing risk culture. Featured capabilitiesTo assess, benchmark, and improve a client’s ERM capabilities, we use a combination of proprietary data and unique tools, including the following:
How are risks aggregated?ISO [1] defines the concept of risk aggregation in the following way: “Combination of a number of risks into one risk (1.1) to develop a more complete understanding of the overall risk” [1, Ch. 3]. Similar ideas are expressed by the Basel Committee on Banking Supervision.
What is aggregation risk in insurance?Broadly, risk aggregation refers to efforts by firms to develop quantitative risk measures that incorporate multiple types or sources of risk.
What is the definition of risk data aggregation?36.16. For the purpose of SRP36, the term “risk data aggregation” means defining, gathering and processing risk data according to the bank's risk reporting requirements to enable the bank to measure its performance against its risk tolerance/appetite. This includes sorting, merging or breaking down sets of data.
What are the 3 types of enterprise risk?What Are the 3 Types of Enterprise Risk? ERM often summaries the risks a company faces into operational, financial, and strategic risks. Operational risks impact day-to-day operations, while strategic risks impact long-term plans. Financial risks impact the general financial standing and health of a company.
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