Which are some interesting stylized facts about Risk Management and IAD Failures across global corporations?
@PRMIA @GARP_Risk @BIS_org
Quantitative Risk Management when turned into a profession, does not work in reality in most cases, as witnessed now outside the Insurance Sector!
Insurance is different because the profession is led by well-trained quantitative professionals such as Actuaries!
The multiple reasons for the failure of Risk Management and Auditing Departments at firms could be the following =>
1.The maturity level of each organization is different and not naturally adapted to act, by giving a timely response to risk flags and control violations, as required.
2.Auditing and Risk Management continues to be dominated by Accountants, who are poor at understanding mathematics and statistics/ econometrics etc.
#Accounting drove Auditing lingua franca which uses financial auditing lexicons, terminologies and taxonomies to understand firm-wide hazards, usually, confine all #risks within one branch of specialism across the boardroom.
Not going beyond Materiality Misstatement Risks!
An e.g. of ignorance and certain underserved areas are IT /MIS /Cyber risks and design of appropriate controls and monitoring mechanisms by both the Audit and the Risk Departments.
3.Developing risk departments without undertaking GAP Studies.
4.Not updating risk registers.
5.Not understanding the difference among risk registers, RCSA Forms and templates, and Risk GAP Studies
6.Using #KRIs to develop RCSAs(when it should be the other way around) and update the timeline on given risk exposure, with the wrong information.

7.Delay in processing and flagging key operational and financial risks control violations.
8.Lack of actionable BI and Risk Research Information to further solidify the risk registers and the risk reporting frameworks in place.
By BI, I am implying Business Intelligence.
9.Reactive risk management is auditing. Risk Management should not be reactive but pro-active. But how? This requires extensive training and discussion.

10 Lack of Risk Culture
Will other members of the organization understand the jargon?
Problems related to risk communications?
11.Confusion across the three lines of defence. The 3 -LOD Model is neither well understood nor well entrenched to prevent risks from cascading across an organization, especially during a crisis.
12.Firms willing to implement some form of risk taxonomy and methodology using a CBOK(Common Body of Knowledge), do not have adequate well-trained or utilized Risk MIS based Automated Systems to effectively implement risk-based actions and escalation procedures in real-time
13.Risk Theory never equal to what we observe and deal with in reality.
What we learn in risk management or quantitative finance or financial engineering degree program does not apply in the real-world scenarios.
for e.g. on using the Gaussian distribution to model risks.
14.Poorly coordinated #GRC Activities.
15.Lack of Oversight from the BODs.
16.Lack of qualified director-level appointment within the Boardrooms.
A complete litany of failures of Internal Auditing, Quantitative Risk Management, Internal Controls and now the last in line to follow is ERM /IRM, both as a process and methodology, presents several challenges for the practitioner.
The ERM, IAD, QRM, FRM, or any other model framework of risk management based on a standard or guidelines as issued by the regulator, or the ISO that does not add to shareholder value, is a waste of => money, time and resources.

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More from @SAH16928046

25 Mar
useful lecture for those who are interested in applying statistical knowledge to problem-solving in risk management, insurance, financial engineering, banking, and actuarial mathematics and modelling.
The biggest problem faced by the statisticians is that they over-rely on the computational characteristics of the Bell-shaped Normal Distribution Model.
Read 4 tweets
22 Mar
What are the future opportunities if I start my career in Financial Computational Modelling?
@CQFInstitute @CFAinstitute @GARP_Risk @PRMIA
Financial Modeling has many connotations. Modelling on Financial Variables is FM - Financial Modeling.
However, a model has many variants.
Please do read Dr Emanuel Derman, if you are interested in analyzing and understanding the computational (quantitative) methodology that taxonomizes model and model risks.
•Financial Modeling in Risk takes on various forms such as Econometric Modeling/ Volatility Modeling and so on etc.

•FM in Equity research is a structural analysis of the business and financial model of the company in which you would like to invest.
Read 17 tweets
10 Mar
How much importance is the FRM certification course?
If you have no background in Banking and Finance subjects, it is better for you to do an FRM / PRM and the other professional qualifications in risk offered by various bodies and institutes around the world.
I am sorry, but with this sort of garbage, you won’t be able to impress employers at the highest level, who are looking for mature #ERM Specialists with industry-specific experiences and learning or Quants with exceptional degrees from the top most unis.
Read 10 tweets
27 Feb
If I want to work as a quant should I pursue a Masters in Data Science or a Master of Financial Engineering?
@CQFInstitute @MITSloan
I might be capable to offer my two cents based on my direct experiences as a risk manager working in the asset management and commercial banking sectors of the economy.
Hence, you might obtain a lopsided view, but something is worthier than nothing?
Data Science and Machine Learning are becoming all so popular these days.
I believe ML - Machine Learning in Finance and Investing will be the hottest talk of the town in the coming days!
Read 14 tweets
22 Feb
What is the difference between a master in financial risk management and a master in quantitative finance? Which is harder?
Risk Management focuses on loss identification, measurement, management and monitoring.
It's a Negative or Hazardous Incidence Reporting focussed science which has to be perfected and practised as a management art.
In a standard Financial Risk Degree, you might learn Financial Risk Management, ERM - Enterprise Risk Management and other aspects of Actuarial Sciences and/or QRM - Quantitative Risk Management which becomes very mathematical in overall terms.
Read 14 tweets
20 Feb
Nations that fail economically gradually become Hyper-Nationalistic.
To name a few over the last century and in recent cases studied up to now included the 3rd Reich, Italy, possibly Imperial Japan due to USA Sanctions before WW2, USSR, and India and the USA(as seen under Trump).
Definitely, #China, as we study its example in a Political Science Masterclass, has become more and more nationalistic, since 79
The recent spade of CoronaVirus coupled with President Xi's style of governance will lead Chinese rhetoric to create more nationalistic hyperbole!
Also, Malaysia, which was largely a lame-duck nation with hardly any notable say on any sort of geostrategy or geopolitical matters, became extremely right-wing and Ultra-Nationalistic under @chedetofficial when the 1997 AFC- Asian Financial Crisis, swept away most of the region
Read 10 tweets

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