By Marcelo Brutti, CRO, Hyundai Capital.
Marcelo, can you tell the Risk Insights audience a little bit about yourself, your experiences and what your current professional focus is?
As many who have a couple of decades or more of experience, I started with Underwriting and Credit Risk Management and evolved into Operational, Residual Value, Market, Compliance, Capital, Liquidity, and other areas over the years to become an Enterprise Risk Management professional. I worked for three of the top ten global banks, largest global card network and currently working for the US captive of the fifth largest Auto Company in the world. For the most part, my focus has been in Risk Management and Capital Management. In my opinion, a good balance between industry hands-on practice, academics and new technology is needed to be able to become more effective and efficient, and to keep up with market threats and opportunities. I believe Risk Management is not only as a control function that protects the company or institution, but a strategic function that can provide significant value to the long term direction and health of any organization. Risk Management has to be ingrained in the culture and the operations of the institution in order to be successful. It is about thinking and acting strategically about the operations, channels, markets, customers. This experience through the US and global markets, different companies and different regulatory environments, has given me the opportunity to see what works and what doesn’t work, how different teams approach similar challenges, how cultures or companies’ culture can be a fuel or an impediment for progress and success, and how Risk Management can be a powerful tool in those environments.
My current focus
My current focus is building a strong Enterprise Risk Management program at Hyundai Capital America. Such ERM program would enable us to optimize our support to our three OEMs, (Hyundai, Kia and Genesis) and help them achieve their business plans. A big component of this involves, creating a Risk Management culture across the enterprise, attracting and retaining the right resources, creating the required processes (not just in Risk Management but across the enterprise), bringing in the technology to be able to evolve in our operations and managing current and future threats and turning them into opportunities.
We are looking forward to your presentation, Long term strategic risks and evolution, at Risk Americas 2018. Why do you believe this is currently a key talking point within the industry?
The Auto Industry is seeing a high degree of change and evolution (or revolution) so it will be imperative for the businesses supporting the auto industry to also adapt to this fast evolution and potential revolution. Risk Management will have to be able to asses and manage a wide set of changes, ranging from the financial products, full digital service, direct and indirect channels, the number of individuals associated with a single vehicle, treatment of collateral, insurance, customer service and ease of doing business, new entrants into the market, to inventory management.
At Risk Americas, you will deliver a unique perspective with extensive industry experience, and your recent experience at Hyundai Capital, how can financial institutions best serve their customers by adapting products to support change and keep up with the evolution?
Yes, my goal is to share a vision and mind-set for all participants in the audience to understand that Risk Management has to continue to evolve not just as a technical function but to keep up with the market, industry, and customer preferences. If not, Risk Management (and potentially the institution) will become obsolete and someone else will take its place to serve the new market or customers’ needs. Risk Management has to be (and be considered by others) a strategic function within the institutions.
What is a key obstacle you would expect to face when changing business model techniques to be data driven?
Personal preference and budgets. Technology and processes are relatively easy. Some executives, managers, and/or analysts don’t like or believe in a data driven approach and would rather make subjective gut feeling decisions. Data availability, technology, tools, knowledgeable resources are not an impediment, it’s all available, it is just about having the right culture, approach and appetite to be able to make the leap forward. It is not about not taking risk either; it is about taking an educated risk based on data and analytics (in addition to good old gut feeling).
Without giving too much away, can you give an insight as to how automation plays a role into long term strategic risk, and the evolution of the industry and risk management practices?
Automation is needed in today’s market to satisfy digitalization, customer needs, and operational efficiency and effectiveness expectations. There are many areas in a FSI where automation can play a significant role. We have seen it for quite some time and continue to evolve on Customer Service and Self-service. Risk Management needs to play a more active role when it comes to automation across the lifecycle of the products and customers.
How do you see the risk and regulations industry evolving over the next 6-12 months, particularly in related to the current and upcoming technological landscape?
I, personally, don’t see a significant shift in regulations in the short-term but I do expect them to be there in the longer-term as the industry changes. I think regulations are needed but only to a certain extent. Over or under regulation can have a negative impact on investors, stakeholders, companies, and customers.