Erwin Boeren 270002C43V ERWIN.BOEREN@NL.IBM.COM | | Tags:  openpages grc ipad solvency reporting | 0 Comments | 1,483 Visits
With Cognos 10.1.1 released you must have noticed the ability of having your reports and dashboards on mobile devices like iPad and iPhone.
With these mobile capabilities CROs (Chief Risk Officers) will now have the ability to measure risk from their mobile devices. For volatile risk areas like Market and Credit Risk this can make a huge difference.
IBM developed a risk monitoring system for CROs where one single version of the truth is provided of different risk areas like Credit Risk, Market Risk, Counterparty Credit Risk, Liquidity Risk, Basel II, Solvency II and Operational Risk. Not only does a CRO have the ability to monitor all these risk areas but he can also monitor the correlation between those risk areas and he is able to respond immediately to changes. Responses can immediately be formulated in the integrated social media platform.
One version of the truth and guaranteed quality of your data is simple to say but how do you govern this? This is where IBMs investment in data models starts to pay off. Since decades IBM develops and maintains data models for financial services including out of the box technical and business definitions. This enables organizations to come to one definition of risk over the entire organization. Taking definitions centrally will add value in the process of taking down the silod approach we spoke about in earlier articles. It will also help you in the accountability process of the business. Finally it is the business that should own the business definitions.
As discussed in our previous published blog (The convergence of GRC and Performance Management) Business Analytics capabilities like risk forecasting, risk adjusted profitability calculations, scenario planning and predictive risk analysis are part of this risk monitoring system called FIRM (Finance Integrated Risk Management).
The new regulation for Insurance companies, Solvency II requires organizations to plan their risk assessments and capital requirements 2 to 5 years ahead and to reflect impact on financial positions when a risk materializes. All this means that an integrated approach to risk management is a must. In next blogs we will go deeper into the Solvency II regulation.
You may have heard the news about an SAT cheating scandal, where students were accused of accepting payments or paying others to take the test for them. It seems to have started at Great Neck North High School on Long Island, New York, which I happen to know well – it’s where I went to the high school, which has a proud heritage of being regularly rated among the top high schools in the nation, with a high percentage of graduates going on to top colleges. Rumors of the cheating is reported to have sounded alarms with the school principal, who did the right thing in reporting to the proper authorities.
What’s relevant from a risk management and control perspective is what the College Board, which owns the SAT, and the Educational Testing Service (ETS), which administers the tests, have done. Based on reports, prosecutors relayed that the first thing ETS said was that there’s no problem – the cheating was an “isolated incident,” and the SAT is “secure.” At a state senate meeting, where legislators and school officials accused both the College Board and ETS of having lax security and a system that failed to punish cheats, ETS said if cheating is discovered the score is cancelled, and the student can get a fee refund and retake the test – that’s it! No one, not the high school nor any college, is notified. ETS claimed that state law prohibits it from releasing information about cheating, but prosecutors say that’s just not so. ETS’s approach of downplaying the problem is all the more surprising in light of past problems. Media reports speak to extensive incorrect scoring of tests and losing test results in England in 2008, with the UK Parliament calling their operation a “shambles.” And going back to 1983, cheating was suspected in California.
We can learn lessons from what’s happened here. Importantly, as with ETS, this isn’t the first time the College Board has had a serious problem with the SAT. Regular readers of this blog may remember my posting of a year ago that highlighted what the College Board did when it learned of problems with incorrect scoring of test results. At that time the president said, to the dismay of many, that it wasn’t necessary to look back to see what caused the incorrect scoring – that it would take too long, and in any event it was sufficient only to re-score the tests results. There was no interest in looking at the risks related to incorrect scoring and determining how they could be managed going forward! There was no attempt at risk identification, analysis and mitigation to deal with potential future problems; rather, it was like putting the organization’s collective head in the sand. Well, maybe the College Board has learned something – when this cheating scandal broke, the College Board president said it has hired a former FBI director to investigate security matters.
There’s little doubt that for both the College Board and ETS their reputations and indeed survival may well depend on academic communities having confidence in their ability to identify in advance what could go wrong, and take prudent actions to proactively prevent problems – to ensure the test results are those of the identified students and accurately reflect their performance. Anything less is unacceptable. And those organizations must fully understand that reputations are intertwined. Although the College Board outsources SAT test administration to ETS, that of course doesn’t mean it removes responsibility, certainly not in the eyes of the marketplace. It doesn’t work that way. It’s critical that these organizations get their risk management and crisis management right, with an appropriate level of coordination.