By Julia Lo, Director, Internal Audit, Prudential
What, for you, are the benefits of attending the ‘Risk Americas Convention’ and what can attendees expect to learn from your session?
Having attended previous years’ Risk Americas Conventions, I gained insightful perspectives from the presentations of industry professionals. I thoroughly enjoyed the networking opportunities and conversations amongst peers. The open and relevant dialogues provided me with the breadth of perspectives that I was able to leverage to benchmark for best practices. I hope to provide similar value-add to the attendees during our session around Risk Identification session. Identifying risks that inevitably come with strategic objectives can be complex, especially in the evolving industry and cyclic uncertainties. The Risk Identification session aims to help us think through critical considerations, such as materiality, depth of review, regulatory aspects and decision-making process.
How can having more accurate risk reporting increase the accuracy of decision making?
Advanced analytics allow better KRI tracking and risk quantification. This allows the risk managers to better identify emerging risks. However, the enhanced use of data and analytics need to be under the lens of judgement. It is important to recognize that rule-based risk management is backward-looking due to the simplicity of rule-based logic using historical experiences. Migrating to principles-based risk management allows risk managers to leverage high-level strategy and risk principles to predict emerging risks and opportunities.
Why is it important to differentiate key and material risks when it comes to reporting risks?
Although there may be numerous material risks within the enterprise, there are key risks that pose a threat to the risk appetite of the enterprise. It is important to differentiate key and material risks when creating the board-level, management-level committee reporting, as well as day-to-day reporting for monitoring activities.
What advice would you give when trying to meet internal reporting expectations?
Meeting internal reporting expectations depends on the intent of the forum to which the reporting is presented. There is a need to ensure a clear alignment of strategic objectives, risk appetite and return on capital. Aside from the escalation of breaches and concerns, the reporting should demonstrate consistent and continued monitoring key risk activities to identify emerging issues and rising material risks.
What do you see ahead for the future of the risk identification and reporting?
Risk management is evolving with transformative technologies that disrupt the risk and control environment within the industry. We need to remain nimble to identify risks and opportunities that are arising in the quickly changing environment. Although automated correlation helps to derive emerging risks, it does not replace good judgement. Risk culture and risk strategy are top priorities that many risk managers are unprepared to solve. But, increasing in-depth analysis of specific risks can help risk managers identify and report embedded risks and the risk mitigation strategies.