By David D’Amico, Compliance Risk Management, Wells Fargo.
David, can you please tell the Risk Insights readers a little bit about yourself, your experiences and what your current professional focus is?
I have been in banking for close to 30 years with over 22 years at JPMorgan then almost 6 years with MUFG Union Bank before coming to Wells Fargo in late 2016. I have held various roles in Operations, Loan Syndication, Technology, Middle Office, Credit Risk Reporting, Enterprise Risk Management and now in Compliance.
You will be speaking at the upcoming Risk Americas 2018 to discuss issue escalation: understanding and communicating what to escalate and how. Why is this a key talking point in the industry right now?
It’s a very important topic because escalating issues can avoid bigger problems down the road. Analyzing the data from escalations can highlight emerging risks or trends across various business groups. It can allow you to be more proactive than reactive which we discuss below. Effective risk management and delegation throughout the organization require escalation processes so management within the organization know when risks should be elevated to the next level of management.
In your opinion, what is the importance of escalating to the right committee and understanding who the right people are?
You want to make sure the right people are aware of the event or issue so that it gets the attention it deserves. Also, if the risk is shared among different risk types then you want to ensure that you have a partnership with those other risk areas to address it properly and in a timely manner.
How can banks ensure they are proactive in regard to issue escalation and the main benefits to being proactive rather than reactive?
It starts with the tone from the top and making sure people are comfortable escalating issues. Once escalated the concern should be in rectifying the problem and not finding blame for it. If there is customer harm involved then making sure they are taken care of and made whole. Being proactive allows you to correct things sooner rather than later. It can also offset reputational risk if you catch yourself rather than someone else catching you.
What key challenges do professionals need to be aware of when ensuring the right issues are escalated? How can banks overcome these challenges?
The biggest challenge is not escalating all kinds of issues as you run the risk of management becoming desensitized and not realizing when there is a real problem.Another is ensuring that the issue is communicated properly so management knows what the problem is and what caused and if not, what is being done to answer those questions. Timeliness of escalations is another challenge, people want to get the answers to questions that senior management might have but that can delay notification of the problem. Banks need to create processes for risk issue escalation, ownership, and resolution. Ensure training cascades to all levels so that people know and understand their role in the process.
How do you see the risk and regulations industry evolving over the next 6-12 months, particularly in related to the current and upcoming political landscape?
It’s always difficult to predict what is going to happen especially when you throw politics in the mix. I think regardless of how the regulatory environment evolves, banks need to do the right thing for their customers, employees and shareholders.
Hear insights like this and more at the 7th Annual Risk Americas Congress…