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Central risk function and risk subcommittee

Discussion in 'SP9' started by Martina Shan, Apr 7, 2019.

  1. Martina Shan

    Martina Shan Member

    Hi
    Could anyone please explain the roles of central risk function and risk subcommittee appointed by the board? it seems that there are a few overlaps in their role eg oversee line management's risk identification and risk management, develop risk policies, etc.

    Also sometimes the textbook refers to risk committee. Is that equivalent to risk subcommittee?

    Thanks very much
    Martina
     
    Martina Shan, Apr 7, 2019
    #1
  2. Anna Bishop

    Anna Bishop ActEd Tutor Staff Member

    Hi Martina

    I agree that it is a bit ambiguous in places, eg the CRF may end up writing the risk policies but the risk subcommittee would steer and review them.

    I think of the risk subcommittee as having more of an oversight role and the CRF more of a analytical / doing / informative role, ie preparing things for the risk subcommittee to consider.

    In the exam, I'd use Sweeting's take on it:

    Risk subcommittee (page 58)
    - strategic oversight of the company's ERM
    - setting risk policies
    - reviewing reports and info received on risk
    - assessing the CRF in terms of how it treats risks
    - overall responsibility on behalf of BoD of making sure ERM framework is implemented throughout the company
    - overall responsibility on behaviour of Bod for making sure company is compliant with objectives set out in framework and with regulation
    - overall responsibility for preparing reports on the above for the whole BoD.

    CRF (pages 36/37)
    - collate info from around the organisation
    - assess risks
    - determine the aggregate portfolio risk
    - process information and report on it, eg compare actual level of risk with risk appetite
    - monitor progress on implementation of ERM
    - design and monitor controls and processes
    - advise line management and the Board (risk subcommittee) on risk
    - be a central point of contact for reporting on risk and communicate up-to-date risk management practices to the rest of the organisation

    Hope this helps
    Anna
     
    Anna Bishop, Apr 9, 2019
    #2

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