Streamlining CCAR processes and ensuring effective controls and documentation

Streamlining CCAR processes and ensuring effective controls and documentation

By Elizabeth Braun, Associate Director, Capital Plan Workstream | US Finance, RBC and Stephanie Cheng, VP, Quantitative Risk Analytics, City National Bank

Can you please tell the Risk Insights readers a little bit about yourself, your experiences and what your current professional focus is?

Elizabeth: Currently, I coordinate our supporting documentation efforts and am a part of RBC’s Capital Plan Team.  I joined RBC over a year ago after consulting on the CCAR project for RBC’s first public filing. Before consulting, I was Chief Compliance Officer at a hedge fund.

Stephanie: I currently lead internal controls and documentation within the Capital Planning and Stress Testing team at City National Bank, a subsidiary of Royal Bank of Canada.  Prior to CNB, I was a KPMG consultant focused on capital planning and stress testing initiatives for CCAR banks.  I was at a large bank prior to KPMG, where I provided model risk and loss forecasting policy oversight with an emphasis on the bank’s use of loss forecasting models within their consumer real estate portfolio.

What, for you, are the benefits of attending a Congress like the ‘Stress Testing USA Congress’?

Elizabeth: I think the benefit to attending the Stress Testing USA Congress USA Congress is being able to learn from peers and find out about best practices in the industry.

Stephanie: The key benefit of attending the conference is to network and meet other bankers focused on stress testing initiatives within their organization. It’s an opportunity to share and to learn about issues facing peer institutions in a changing regulatory landscape.

You are participating in a panel discussion to review streamlining CCAR processes and ensuring effective controls and documentation. What do you think will be the key talking points amongst panelists and why?

Elizabeth: Industry practices and whether there are any signals of changes to supervisory expectations.

Stephanie: The key talking points will likely be City National and RBC’s initiative to transition CCAR to a BAU (business as usual) state, as well as ongoing regulatory changes and impact to CCAR/DFAST.

How can CCAR processes be streamlined to ensure effective controls? What would be the main benefits of these changes?

Elizabeth: For the past few years, there has been a large CCAR dedicated office and as we move into a BAU, there should be less of an effort on building engines and processes. We should be working to streamline processes and improve efficiency.  Additionally, we have spent a lot of time writing documentation over the past few years and it should be easier to update going forward with each cycle.

Stephanie: We have many manual processes at the bank and are currently working on automating as many of these manual processes as possible to reduce risk and increase efficiency.  In addition, the RBC USA holding company (“IHC”) has several longer term initiatives, including implementation of a centralized warehouse to integrate data across acquired companies and legacy systems.

In your opinion, is a centralized or decentralized risk and control function? What are the key benefits of your choice?

Elizabeth: We have a centralized model in our organization.  The centralized model helps to make sure similar controls are implemented across the board.

In your organization, is the risk and control function centralized or decentralized?

Stephanie: It is more decentralized at the City National level but centralized at the IHC.

How do you see the risk landscape evolving over the next 6-12 months?

Elizabeth: I think clarity from the FRB on Dodd Frank Rollback will be important going forward.

Stephanie: Changes to Dodd Frank have a direct impact to CNB, and the full impact will become apparent with our upcoming submission.

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