What is driving the FS Industry to invest more in #GRC &/or ERM Technology?
@irmglobal @IRMIowl @ERMAcademy
Let me try to answer this question in a generalized manner. So, its applicability extends beyond banks, risk insurance and asset management firms.
I think ERM Systems and/or the GRC Systems have now become more regulation oriented across different legal compliance jurisdictions.
Kindly, do note that the ERM/ GRC Models being used are not always the same. Different Industries identify, measure and apply risk controls in an entirely different manner from one another.
Hence #ERM - Enterprise Risk Management Methodology and/or Models are not a monolith in any sense!
They give rise to different processes and procedures, creating different interpretations of the risk assessment methodology and philosophy (aka risk assessment modus operandi).
Furthermore, risk management systems are classified either as value protecting or value-enhancing systems.
The focus of ERM is shifting from being solely a value-protecting system to what is now perceived to have transformed into a more value-enhancing system, where the latter is closely aligned with the overall business strategy and long-term objectives of a firm.
In simple words, the term and concept of (risk) uncertainty are at times appreciated and not detested in terms of defining various process outcomes! The Risk Appetite of a firm shall determine its risk acceptance criteria.
However, generally, the choices are to implement one out of the Six frameworks either partially (cherry-picking to develop a Risk Governance Architecture) or
to be in full compliance with anyone as per the relevant regulatory injunctions in a given industry using the following guidelines from =>
1.#COSO (2017 upgraded version).
2.#ISO-31000 RMS - Risk Management Standard (upgraded)
3.#RMM - Risk Maturity Model by #RIMS
4. #GRC - #OECG
5. @BIS_org Accords ( for the Retail Banks and the other Deposits mobilizing institution-specific accord circulated by the BIS-Bank of International Settlements based in Basel; nevertheless, some areas within the Basel II Operational Risk Literature, are selectively applied
by #ERM /#GRC Experts, to develop #ORM- #Operational Risk Management guidelines in the other industries too).
6.#Solvency II (limited to only Insurance firms, but again the #risk #modelling concepts have influenced risk measurement techniques across vertical industries).
7. Etc.
So, what are the Key Drivers and Factors?

They largely fall into three broad categories across banks and other FIs!
A. Local Risk Regulation Requirements as set by the local regulator such as FED in the USA or FSA/BOE in the UK or ECB regarding capital stress testing guidelines issued to systematically important (too big to fail systemic risk) large banks.
B. Supranational Risk Compliance requirements that are to be met by individual countries as part of a much larger economic working group within a region or at the global level.
C. #IFRS9 Modeling and adherence to the rapidly changing accounting standards, especially across financial institutions such as banks and possibly other lending firms.
Additionally =>
In the Banking Sector, it is the upcoming #BASEL IV (#FRTB - led risk capital computational and economic capital modelling compulsions and reforms),
Solvency II Compliance as set out for the Insurance Companies as per the issued EU Directives and similarly being done elsewhere.
A higher level of Risk and Quality assurance is demanded by the Auditors, shareholders, investors, creditors, Credit insurers, credit rating firms, stock exchanges, Re-insurers and other economic agents and counterparties in the global economy.
Last but not least is the cross-fertilization of ideas we see within the academic disciplines and the scholarly discourse. Risk Management or ERM as simply put to you is integrating and rubbing shoulders with the other practices such as #TQM - Total Quality Management,
#SPC - Statistical Process Controls, Six #Sigma / Lean Six Sigma, Reliability Engineering, Financial Engineering, & Actuarial Science.
Not to forget to mention that the advancement in Data Sciences and Machine Learning too is driving the risk assessment processes at a much faster rate at firms, which previously were unaware of how to use business intelligence, business analytics, data wrangling,
computing software systems and AI - Artificial Intelligence to maximize digital systems efficiency and its process/application #FMEA Controls.
So all in all, the aforementioned forces are applying pressure on the commercial participants to invest more in GRC and ERM technological advancements to meet the ultimate corporate end -objectives, which are to maximize the #SVA - Shareholder Value Addition Metric to the fullest

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