As a GRC / #ERM Professional one should always follow the golden rule, that is ->
"If it hurts, it works!"
If our actions and impressions are not keeping the front and back offices at the edge of their toes, then we aren't fulfilling our job description responsibilities.
Simple!
"If it hurts, it works!"
If our actions and impressions are not keeping the front and back offices at the edge of their toes, then we aren't fulfilling our job description responsibilities.
Simple!
You have to annoy people to get things done at Financial Businesses!
Cannot be too sweet all the time.
Risk Managers should adopt a more stern and stiff disposition.
Have an awfully cosy relationship with the traders and RMs might not be helpful.
Cannot be too sweet all the time.
Risk Managers should adopt a more stern and stiff disposition.
Have an awfully cosy relationship with the traders and RMs might not be helpful.
If a treasury dealer or capital market trader is violating his stated desk exposure or any other risk limits aka haircuts, assigned to him by the Middle Office, the former should not be allowed to engage in financial activity any further.
Just unplug the PC/ Trading screen.
Just unplug the PC/ Trading screen.
The Global Risk Community and the institutions which hire Risk Experts are equally complacent.
Rogue traders and bankers have damaged financial systems all over the world, from the infamous banking failures of 1974 back in the City, extending up to #Baring and SOCGEN, and beyond!
Rogue traders and bankers have damaged financial systems all over the world, from the infamous banking failures of 1974 back in the City, extending up to #Baring and SOCGEN, and beyond!
Nic Nielson at the Baring Bank? Remember?
He was doing both front and back-office transactions together.
Nobody caught him because there was no Middle Office to validate, cross-check and revalue his Transactional P&L a/c
Hence, he used a string of derivatives to hide the risks.
He was doing both front and back-office transactions together.
Nobody caught him because there was no Middle Office to validate, cross-check and revalue his Transactional P&L a/c
Hence, he used a string of derivatives to hide the risks.
Actually, regrettably, most of the risk managers and financial engineers come from highly numerate backgrounds, which do not teach criminology, sociology of crime, or forensic investigation methods.
Hence, RMs fail to detect rogue trading using standard risk assessment tools
Hence, RMs fail to detect rogue trading using standard risk assessment tools
Check the blotter!
All the traces of the crime are in the blotter or the deal sheet which a front office trader/ dealer or fund manager uses adjacent to the trading screen.
If you find that transactions are erratically cancelled, overwritten or rewritten, that is a crime scene!
All the traces of the crime are in the blotter or the deal sheet which a front office trader/ dealer or fund manager uses adjacent to the trading screen.
If you find that transactions are erratically cancelled, overwritten or rewritten, that is a crime scene!
Most of the dealer/ traders still use paper, pencil and eraser, to record transaction deals at bid/offers rates
The recap sheet position is handed over to the back office, for reconciliation with the MIS
Middle Office must check, validate, revalue, & if need be stop transactions
The recap sheet position is handed over to the back office, for reconciliation with the MIS
Middle Office must check, validate, revalue, & if need be stop transactions
Front Office transactions should never hit the P&L Account directly.
They should follow the full audit trail and must go through the back office and middle office simultaneously, to prevent both fraud and predicate financial crimes unleashed by the potential rogue traders!
They should follow the full audit trail and must go through the back office and middle office simultaneously, to prevent both fraud and predicate financial crimes unleashed by the potential rogue traders!
However, things have become more complicated with the treasury department at most banks placed under the Head of Transactions Banking.
That makes treasury specific risk oversight more tenacious.
Not in favour of that.
Treasury and ALM are highly specialized activities
That makes treasury specific risk oversight more tenacious.
Not in favour of that.
Treasury and ALM are highly specialized activities
In short financial institutions should include predicate financial crimes compliance, AML/KYC, sanctions check listing, CFT controls, FINTECH drove ML/DSS Algo Risks, white collar fraud assessment and the most opaque of all risks, which happens to be Cyber Crime, more seriously!
@threadreaderapp unroll
• • •
Missing some Tweet in this thread? You can try to
force a refresh
