By Azlina Wetmore, Head of Commercial Credit Policy and Innovation, Capital One
Can you please tell the Risk Insights readers a little bit about yourself, your experiences and what your current professional focus is?
A large part of my career has been effecting change across different disciplines and geographical locations. After qualifying as a Barrister in the UK, I spent some years as a regulator and in-house advisor within an International Bank in Asia. In that role, I became increasingly involved in the implementation of new products and gravitated towards driving change management initiatives, specializing in risk mitigations. As a contributor to New Business, I helped established new bank franchises in India and new products for Private Banking, Investment Banking and Asset Management in diverse locations including Hong Kong, Korea and Australia. Following the financial crisis and the introduction of the Dodd Frank regulations, I moved to the US to help the Bank build its Risk Governance Framework. Once that was completed, I transitioned to managing Regulatory Risk and Strategic Transformation for the CRO in the US.
Currently, I head the Policy & Innovation function within Capital One. The team is responsible for developing and implementing policy relating to Credit Risk for the Commercial Bank and Market & Liquidity Risk at the Enterprise Level. As part of the mandate, we are also responsible for risk governance and regulatory assurance for these risk categories. The innovation element involves us leveraging on technology to improve user accessibility and experience to what could otherwise be perceived as being clunky and bureaucratic.
What, for you, are the benefits of attending a conference like the Risk Americas Convention and what can attendees expect to learn from your session?
The benefits of attending conferences like Risk Americas Convention is that we get to exchange information with our peers and other banks on risk management practices and share solutions that may resolve the challenges that the industry faces as a whole. There is a lot of benefit from benchmarking, one of which is that you get a better sense of where you are and where you would like to be in the spectrum of ‘best practices’.
In my session on Launching New Business successfully, I hope that the attendees will be able to learn the key ingredients of a successful launch and avoid the pitfalls that are inherent in change programs.
In more recent times, there have also been a lot of debate around Waterfall vs. Agile principles and whether these have any far reaching effects on the product delivery. I would like to encourage the discussions, specifically the use of Agile principles in the context of a regulated entity.
In your opinion, what are the top three considerations when launching a new business?
The top three considerations, in my opinion, would be executive management buy in, senior sponsorship and having a seasoned change team in place. These will impact the three connecting fundamentals in the launch of any new business: scope, time and resources.
Can you provide insight into setting appropriate risk appetite, and how organizations can set appropriate risk-rewards?
Business strategy and risk appetite are interrelated. Risk appetite is the level of risk that an organization is willing to accept in return of the rewards it expects to receive. In setting risk appetite, consideration should be given to each individual risk category as well the integrated view of these risks so that concentrations and correlations can be factored in.
A functioning risk appetite would not just be embedded in an organizational business strategy but also in its day to day decision making. Continuous monitoring and reporting are essential to ensure that the organization is staying true to its risk appetite. Regular calibration of the risk appetite is necessary to keep an organization competitive and responsive to market conditions.
What are the key considerations that need to be made when looking at infrastructure, processes and controls?
Key considerations include the existing state or baseline of the infrastructure, processes and controls and the additional build that would be required with the implementation of the new business. Would a new build be required to support the product or can the existing system support the new product? A cost benefit analysis would have to be undertaken, taking into account what could be the hidden costs of obtaining the appropriate data sourcing and flow, reporting and back testing. Some new products may require different types of skills which could also lead to specialized teams being stood up to maintain it.
It is also important to test the infrastructure, processes and controls prior to go-live. Test environments often pick up scenarios that would have been missed in the planning stage and errors or system bugs can be less costly to get fixed at this stage.
What insight can you provide with regards to accountability/responsibility, and using past examples, to make a success of launching a new business?
For any successful launch of a new business, there has to be a senior sponsor accountable for the product and the delivery. It is imperative for them to have executive management’s buy-in and confidence as this will determine the support structure for the new business. The senior sponsor is responsible for providing clear objectives and goals to the team planning and implementing the new business. In my experience, it helps if the senior sponsor is also approachable and accessible, and willing to invest time in the planning and “pre-mortem” exercise where all potential failures are discussed upfront so that Plan B or C can be devised.
The New Business lead’s role is to ensure that they understand the mission and the product. They have to be equipped with the appropriate resources and capabilities to deliver the product effectively. Communication and transparency are key to ensure that all stakeholders are informed, engaged and willing to invest their time and effort into the launch and running of the new business.
