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Internal audit, going concern, Jessops and the sweep of history

June 17, 2013

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flickr Cairo pyramids

An earlier version of this article appears on the ACCA e-newsletter here. With multiple UK high-street retailers failing since Christmas 2012, it is reasonable to ask ‘where were the internal auditors?’ and ‘where was these firms’ management of risk’?  The rash of failures in a single sector raises inevitable questions about the focus of risk […]

Excuse me, how many lines of defence? The new financial Maginot lines . . .

March 18, 2013

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Soldier lines of defence

Depending on your point of view, the ‘three lines of defence’ metaphor has its origins in either sport or in military planning.  It brings to mind three distinct lines operating independently; each ready to step in to save the day if the line before it crumbles.  In NFL, there can be three lines of defence […]

Internal audit in financial services: a long time to wait for not very much

February 13, 2013

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Jack Laskey (Orlando) and Naomi Frederick (Rosalind), William Shakespeare’s As You Like It, Globe Theatre, 2009, (dir: Thea Sharrock)

“Time is the old justice that examines all such offenders, and let Time try.” As You Like It, Act IV, Scene 1      As Canadian consultant Tim Leech pointed out in an ACCA column in 2009, internal auditors really didn’t have a good financial crisis.  Quite validly, Tim asked the question: Not being fingered for […]

1.5 billion reasons to improve your interviewing skills

December 20, 2012

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Microphone landscape

UBS, the giant Swiss banking corporation, has been fined the equivalent of USD 1.5 billion by supervisors in the US, UK and Switzerland in the latest (but far from the last) chapter of the LIBOR rigging scandal, said to involve investigations against more than a dozen major investment banks.  These fines dwarf earlier fines levied […]

‘Re-rethinking’ the relationship between risk management and regulatory systems

December 6, 2012

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palace of westminster bw

The current context of regulation Who’d be a regulator today?  As more and more regulatory initiatives run in to trouble, it is harder than ever to get agreement domestically, let alone internationally, on what regulation in any sector should prescribe or proscribe and how it should operate. In the UK, the findings of the inquiry […]

The right man for an almost impossible job?

November 26, 2012

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Mark Carney

In recent years, in Masters’ lectures I deliver each year on governance and risk management, I have prescribed as mandatory reading the text of a speech by Mark Carney, then and now Governor of the Bank of Canada and now Governor-designate of the Bank of England.  It was a speech he delivered at the Economic […]

An agenda for improving corporate risk management

October 31, 2012

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Man on fire

In the course of preparing a series of seminars we will be delivering in London this winter, we have focused on what an agenda or ‘manifesto’ for improving corporate risk performance would look like.  What should the firm do practically to improve its management of risk and uncertainty? The agenda has five items. 1. Better […]

The truth about Neil Armstrong, Barclays, LIBOR, risk & culture

September 21, 2012

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800px-Trinity_Test_Fireball_16ms

To go directly to the commentary paper, ‘Regulation, risk & culture: will we never learn?’, click here. The report of the parliamentary Treasury Committee on LIBOR appeared a week after the death of American astronaut, Neil Armstrong.  The two events are strangely linked by their relevance to culture – but separated by a yawning gap in the […]

Banks 20 years behind in risk systems? Regulator, heal thyself.

August 8, 2012

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Royal-McBee LGP-30 computer

In a recent (29 July) article in the FT titled “Banks 20 years behind in risk management”, the author cited a survey by Corven, a consultancy, that indicated that “the largest banks and insurers are at least two decades behind their peers in the aviation industry in managing risk.” The article continued: “Respondents described 62 […]

A voyage in oxymoron: a case study in ERM system selection

July 24, 2012

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flickr wire barb

ERM is a broad church. Currently, it means different things to different people, depending on experience and discipline.  How far can the term be pushed before it loses meaning? In a recent chat thread, a US central government agency’s head of risk appealed for “an ERM system evaluation checklist” to be used “to compare features […]

Separated by a common language?

June 19, 2012

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610-certain-uncertainty

As if he held the truth somehow to be self-evident, Jim DeLoach of Arthur Andersen, in a landmark paper written in 1995, prescribed the need for a common risk language in any enterprise risk management (ERM) initiative.   Without any apparent fear of contradiction, he stated the need for a common risk language as gospel truth. […]

ERM and the Kaplan-Mikes (Harvard) heresy: ISO 31000 is “not relevant”

May 3, 2012

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Harvard yard

On a chat site recently, US-based performance management specialist Robert Kaplan was quoted as saying to a conference in the Middle East that rules-based risk management was “not relevant”.  When the interlocutor (Domenic Antonucci) pushed him for specific clarification on how this applied to ISO 31000, Kaplan is quoted as saying he found it to […]

Posted in: Risk, Uncategorized

(R)evolution of risk knowledge & training – more realistic or more of the same?

May 2, 2012

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OLYMPUS DIGITAL CAMERA

To look at most risk training on offer, you’d think post-crisis risk management was all ‘business as usual’.  Worse, perhaps it really is ‘business as usual’.  Why, after such fundamental challenges to the logic and efficacy of risk management since 2007, has there been so little change to how all businesses – whether financial institutions […]

We need to talk about . . . COSO

April 11, 2012

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flickr raliway tracks

At the end of last month, the period of public consultation of the redraft of COSO’s internal control framework closed.  COSO received around 90 comments, or around 1 comment for every 90 SEC filers who have to live with the current framework as the basis for their internal control assessments under §404 of the Sarbanes-Oxley […]

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Thinking about risk culture

April 2, 2012

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flickr dandelion head

In the wake of the failure of MF Global, I have seen a number of commentators attributing its failure to its culture.  The criticism is also prevalent in post mortems of bank failures in 2007 and 2008 and the ensuing period. The danger with the ‘culture’ explanation is that you cannot create a culture – […]

Understanding & addressing the crisis in financial regulation

July 6, 2011

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flickr pyramid

In the introduction to the last book he wrote before his death in October 2010, the great Polish-born American mathematician, Benoit Mandelbrot, gave a depressing assessment of the state of financial economics. It is, he said, ‘as a discipline, [sic] where physics was in the sixteenth century: a messy compendium of proven know-how, misty folk […]

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